Sales of new single-family homes in March plummeted 14.5% to a seasonally adjusted annual rate of 384,000, hitting the lowest level since July 2013, the U.S. Census Bureau reported Wednesday.
The March drop in new home sales was a year-over-year drop of 13.3%. The report showed there were drops in three of four U.S. regions.
The March results were well below analyst expectations. The report can be read here.
Home sales have been tepid in market facing rising interest rates, investor-driven home price increases, declining inventory, a rising affordability gap and the much tighter lending standards imposed on the industry.
“Another disappointing home sales report on the heels of yesterday's decline in existing home sales activity. As we noted yesterday, rising prices are becoming problematic,” said Sterne Agee chief economist, Lindsey Piegza. “While fueling existing homeowners' confidence with a sizable wealth effect, declining affordability is squeezing many potential home buyers out of the market. Without income growth or sizable savings to offset the cost increase, home sales are likely to remain tepid, at least in the near term.”
Sales did pick up in the Northeast region, while falling in the three much larger regions.
Home prices continued to climb through March, rising to a median price of $290,000, up 12.6% from March 2013.
“The sharp decline in March’s new home sales is further evidence that winter weather is not the catalyst for the sluggish housing data the past few months,” Quicken Loans vice president Bill Banfield. “The rise in interest rates and prices of new homes is leaving some potential buyers with sticker shock and ultimately prolonging their home search process.”
The new home supply is at six months given the March sales pace, which is up from five months supply in February.
Wednesday's report comes as the latest bit of bad news for the housing industry.
The Mortgage Bankers Association notes that mortgage applications are down 16% from this time last year, and mortgage activity is actually at its lowest level since 1997. Mortgage originations in general are at a 14-year low according to Black Knight Financial Services.
Housing starts in March rose less than expected and much less than expected given the supposed demand pent up from the bad weather in January and February.