New home sales in March 2022 dropped to their lowest rate since November 2021.
New Home Sales Take Hit in March
Rising home prices, rising mortgage rates and rising inflation percentages forced homebuyers to think long and hard about purchasing a new home in March. The result of that hard thinking? New home sales dropped -8.6% m/m and -12.6% y/y, according to data released from the US Census Bureau and the US Department of Housing and Urban Development.
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New residential sales in March 2022 looked like this:
- New Homes Sold: 763,000
- New Homes for Sale: 407,000
- Median Sales Price: $436,700
According to RCLCO Principal Kelly Mangold, “A combination of factors has contributed to this decline (in sales) including rising interest rates and rising prices, which have both hindered purchasing power for buyers, and a decline in single-family starts which has left inventory levels low.”
Mangold added, “However, demographics remain a strong driver of housing demand and as the market adjusts to deliver product at price points and formats that align with this demand, sales are likely to be bolstered.”
Prices & Numbers of New Homes
The median sales price of new homes sold during March was $436,700. The average sales price was $523,900, an increase from February’s revised estimate of $508,100.
The number of new for-sale homes by the end of March 2022 was estimated at 407,000, up +3.8% m/m from February’s revised estimate of 392,000 and up +33.4% y/y. Industry experts estimated that available for-sale inventory in March represented a 6.4-months’ supply of new homes at the current sales rate.
Existing-Home Sales Dropped in March
According to the National Association of REALTORS® (NAR), existing-home sales fell -2.7% m/m and -4.5% y/y in March 2022.
Lawrence Yun, Chief Economist with NAR, said, “The housing market is starting to feel the impact of sharply rising mortgage rates and higher inflation taking a hit on purchasing power. Still, homes are selling rapidly, and home price gains remain in double-digits.”
The median existing-home sale price jumped +15.0% y/y at $375,300. This continued rise in price in March represented the 121st consecutive month of y/y price increases. Yun expressed caution about this longest-ever streak in rising existing-home prices by warning sellers to not anticipate easy profits in the future. Quite simply, according to Yun, declining demand due to higher interest rates and higher home prices are scaling back buyer demand and buyer competition via bidding wars.
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