After seeing decreases since the beginning of 2018, new home sales reversed course and increased in March signaling a busy spring ahead for loan officers, according to the latest report from the U.S. Census Bureau and the U.S. Department of Housing and Urban Development.
Sales of new single-family homes increased in March to a seasonally adjusted annual rate of 694,000, the report showed. This is up 4% from 667,000 new home sales in February and up 8.8% from March 2017’s estimate of 638,000.
“Given recent strength in both new home permits and starts, it was only a matter of time before sales of new homes themselves perked back up,” Zillow Senior Economist Aaron Terrazas said. “And revisions to prior months’ data which initially showed disappointing drops now reveals that the start to 2018 may not have been so bad after all.”
“Combined with yesterday’s decent existing home sales data, today’s report gives the housing market a much-welcome double whammy of good news, especially on the inventory front,” Terrazas said. “Inventory of existing homes has risen in each of the past three months, the first such streak since early 2015, and new home inventory has now been above the 300,000 threshold for two straight months – the first time in almost a decade.”
And as inventory begins to pick up, the already high demand from homebuyers will only increase, promising a busy spring for loan officers across the U.S.
The median sales price of new homes sold increased in March to $337,200, up from $326,800 in February. The average sales price in March was $369,900.
One expert explained what kind of loans borrowers are taking out this spring, and how it compares historically.
“Average price was the weakest since August,” LendingTree Chief Economist Tendayi Kapfidze said. “Prices have weakened as high priced homes are back down to 16% of sales, the lowest since October.”
“In December sales above $500,000 were 24% of sales, the highest proportion since the sales price breakout began in 2002,” Kapfidze said. “This was due to buyers purchasing in anticipation of the tax plan curtailing the mortgage deduction on high balance mortgages.”
The seasonally adjusted estimate of new homes for sale at the end of March remained steady at 301,000 homes. However, because of the faster sales pace, this represents a supply of 5.2 months, down from a downwardly revised 5.4 months the month before.
“Demand for homes is so high that neither higher interest rates nor higher home prices deterred homebuyers in March, as sales beat estimates, coming in 4% higher than February to a 694,000 annualized pace,” said Robert Frick, Navy Federal Credit Union corporate economist. “We can expect sales to stay high because inventory continues to tighten, falling from a rate of 5.4 months to 5.2 months.”
And while home sales did pick up in March, there is still plenty of room for growth in the months to come.
"New home sales rose again increasing 4% from last month and 8.8% from last year,” realtor.com Chief Economist Danielle Hale said. “This move is in the right direction, but there is still plenty of additional room to grow. New home sales made up 11% of all U.S. home sales in March, while in a normal market they would be 14% to 15% of sales.”