U.S. New Home Sales Up 5.8% in March -- Update
April 25 2017 - 12:02PM
Dow Jones News
By Laura Kusisto and Jeffrey Sparshott
Sales of new homes increased sharply for the third consecutive
month in March, an indication that demand is picking up as the
crucial spring selling season heats up.
Purchases of newly built single-family houses, which account for
about a 10th of overall U.S. home sales, increased 5.8% last month
from February to a seasonally adjusted annual rate 621,000, the
Commerce Department said Tuesday.
That was the strongest level since July, when sales reached a
9-year high.
The data were clouded by a margin of error of 15.5 percentage
points that is much larger than the reported increase.
Still, momentum appears to be building in the market. New home
sales have increased every month so far this year, and were up
15.6% year-over-year in March, slightly more than the margin of
error in the report.
The median sales price for a newly built home rose just over 1%
from a year ago to $315,100.
Economists expect new home sales to continue to increase this
year as builders step up construction of single-family homes and
more first-time buyers come back into the starter-home market.
Real-estate consultant John Burns said one reason the market for
new homes hasn't been stronger is that many of the big markets for
new construction, such as Las Vegas and Phoenix, are only now
starting to boom again.
"You need those big construction markets to take off," Mr. Burns
said. "It's starting to pick back up in those markets, just off of
a very low level."
New construction has been sluggish since the recession, due to
labor shortages, a lack of available credit to small home builders
and, more recently, the rising cost of raw materials such as
lumber. U.S. housing starts decreased 6.8% in March, although the
overall trend in recent months has been one of acceleration in the
pace of new construction.
The existing-home market has been going strong, although a
shortage of supply is holding back sales numbers. Purchases of
previously owned homes, which account for the vast majority of U.S.
sales, increased 4.4% in March to their highest level in a decade,
the National Association of Realtors said last week.
New-home construction has improved steadily over the past six
years but remains well short of levels before and during the
housing bubble. Over the past year, for example, builders have
started construction on almost 792,000 single-family homes. From
1995 to 2000, a fairly normal stretch for the market, the average
was 1.2 million a year.
By some measures the supply of inventory of new homes is more
robust than that of existing ones. It would take just 3.8 months to
exhaust the supply of previously owned homes on the market at the
current sales pace, versus 5.2 months for new homes, Commerce said
Tuesday.
The number of new homes for sale was the highest since July
2009.
Write to Laura Kusisto at laura.kusisto@wsj.com and Jeffrey
Sparshott at jeffrey.sparshott@wsj.com
(END) Dow Jones Newswires
April 25, 2017 11:47 ET (15:47 GMT)
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