Steel Markets

New Home Sales Rise on Lower Mortgage Rates

April 23, 2019

Sales of new homes rose for the third consecutive month in March to a seasonally adjusted annual rate of 692,000 units, according to the Commerce Department on Tuesday. Sales were 4.5 percent higher than February’s revised rate and 3.0 percent above the March 2018 estimate.

The positive March report was a surprise to economists polled by Reuters and The Wall Street Journal who expected a 2.5 percent decline instead of a 16-month high.

Inventory at the end of March was estimated at a SAAR of 344,000 homes for a six-month supply at the current sales rate.

The median sales price of new houses sold in March was $302,700 and the average sales price was $376,000.

Lower rates for fixed mortgages helped spur sales of new homes. “The return to the long-run trend for sales and recent declines in mortgage interest rates (now around 4.2 percent) suggest demand is available when housing affordability conditions improve,” said National Association of Home Builders chief economist Robert Dietz.

Sales increased 3.6 percent in the South for their highest level since 2007. Midwest sales jumped 17.6 percent and the West increased 6.7 percent. Sales in the Northeast plummeted 22.2 percent.