Home Economic Trends New Single-Family Home Sales Fell Again in March as Prices and Mortgage...

New Single-Family Home Sales Fell Again in March as Prices and Mortgage Rates Continue to Rise – Robert Hughes

Sales of new single-family homes fell in March, declining 8.6 percent to 763,000 at a seasonally-adjusted annual rate from a 835,000 pace in February. The March drop follows a 1.2 percent decline in February and a 3.0 percent drop in January. The three-month run of decreases leaves sales down 12.6 percent from the year-ago level (see first chart). New home sales surged in the second half of 2020 but then slowed sharply in the first three quarters of 2021, hitting a low of 667,000 in October. Following the October low, sales posted two strong gains in November and December but have reversed some of those gains in the first quarter of 2022 (see first chart). Meanwhile, 30-year fixed rate mortgages were 5.11 percent in late April, up sharply from a low of 2.77 percent in August 2021 (see first chart).

Sales of new single-family homes were down in all four regions of the country in March. Sales in the South, the largest by volume, fell 10.2 percent while sales in the West dropped 6.0 percent, sales in the Midwest decreased 8.7 percent and sales in the Northeast, the smallest region by volume, sank 5.4 percent for the month. From a year ago, sales were up 12.8 percent in the Northeast and up 21.0 percent in the West, but are off 13.8 percent in the Midwest and off 24.7 percent in the South (see second chart).

The median sales price of a new single-family home was $436,700 (see top of third chart), up from $421,600 in February (not seasonally adjusted). The gain from a year ago is 21.4 percent versus a 16.5 percent 12-month gain in February (see bottom of third chart). On a 12-month average basis, the median single-family home price is still at a record high (see top of third chart) while the gain from a year ago in the 12-month average is 19.3 percent (see bottom of third chart).

The total inventory of new single-family homes for sale rose 3.8 percent to 407,000 in March, putting the months’ supply (inventory times 12 divided by the annual selling rate) at 6.4, up 14.3 percent from February and 52.4 percent above the year-ago level (see fourth chart). The months’ supply is at a relatively high level by historical comparison and is substantially higher than the months’ supply of existing single-family homes for sale (see fourth chart). The relatively high months’ supply and surge in mortgage rates may be among the reasons for slowing gains in the median home price. The median time on the market for a new home remained very low in March, coming in at 3.0 months versus 2.9 in February.