Believe it or not, new home sales in March 2019 jumped by +4.5%, according to a newly released joint report by the US Census Bureau and the Department of Housing and Urban Development. Reuters, according to Bloomberg News, attributed the rise to an increased share of new homes sold in the $200,000 – $300,000 price range.
This +4.5% jump in new home sales was a nice surprise for industry experts as was the -9.7% drop to $302,700 in new home median sale prices for industry consumers. The March 2019 increase in new home sales reached its highest level since November 2017 while the drop in new home median sale prices fell to a two-year low.
New home sales account for approximately 11.7% of the overall housing market. Some 62% of those new homes sold were either currently under construction or yet to be built homes, according to Reuters.
New home sales increased in three of the four regions of the country.
- In the Midwest, new home sales increased +17.6%.
- In the South, New home sales increased +3.6%, the best levels since July 2017.
- In the West, new home sales increased +6.7%
- In the Northeast, new home sales fell an eye-popping -22.2%.
This surprisingly strong reading for new home sales was reinforced by a report from the Mortgage Bankers Association that indicated applications for home loans rose to its highest level in almost 9 years.
Supply of new homes currently for sale fell to six months in March 2019 from 6.3 months in February 2018.
Does this rise in new home sales suggest that lower mortgage rates, rising wages and the Fed’s “pause” on borrowing costs are the catalysts? Denise Hale, chief economist with Realtor.com, thinks so.
“In this housing market, affordability for buyers is key,” said Hale. “This trend supports the fact that lower mortgage rates have started to entice buyers this spring and foreshadows a potential strengthening of existing home sales in the months to come.”