Pace of new-home sales may continue to decelerate before stabilizing later this year, economist says
With buyer confidence waning and buyer traffic declining, sales of newly built, single-family homes experienced a sharp decline in March.
March's new-home sales plummeted 15.4% to a seasonally adjusted annual rate of 627,000 units, according to data from the US Department of Housing and Urban Development and the US Census Bureau. Sales were 9.5% lower year over year.
All four regions reported a decline in new-home sales: down 41.5% in the Northeast, down 8.1% in the Midwest, down 0.8% in the South, and 38.5% lower in the West.
“The drop in March sales reflects buyer concerns over the virus, and was primarily concentrated in the hardest-hit regions of the Northeast and West,” said NAHB Chief Economist Robert Dietz. “The weakening in sales is in line with our builder surveys that showed dramatic declines in buyer traffic and builder confidence in April. We expect further slowing of the pace of new home sales in April, as jobless claims continue to rise, before stabilizing later this year.”
Inventory increased to a 6.4-month supply, with 333,000 new single-family homes for sale, down 1.2% year over year. Of that total, only 76,000 were completed and ready to occupy. The median sales price was $321,400.
“Despite the sharp decline in new home sales this month, the first quarter of 2020 was actually 6.7% higher than the same period last year, reflecting a strong pace prior to the virus outbreak,” said Dean Mon, chairman of the National Association of Home Builders (NAHB). “While we expect to see some further impacts on the industry, we remain confident that housing will be a sector that will help lead the economic recovery.”
