Sales of new homes slip in March

Sales of new homes fell slightly in March for the third straight month as builders remain cautious while the housing market gradually recovers. 

Home sales slipped 1.5 percent last month to a seasonally adjusted annual rate of 511,000, from 519,000 in February, the Commerce Department said Monday.

{mosads}”Builders are slowly raising inventory as they remain cautious about the housing recovery,” said Ed Brady, chairman of the National Association of Home Builders.

The pace of sales of newly built homes has fallen from 521,000 in January but sales are up year-over-year — 5.4 percent above the March 2015 estimate of 485,000.

The March drop is mostly due to the upward revision in February. Sales in the first two months of the year were a combined 26,000 higher than initially reported. 

Home sales remain below what is considered a normal level of about 650,000.

“Though sales were flat this month, they are running modestly higher on a year-over-year basis,” said Robert Dietz, NAHB’s chief economist.

“We expect the sales pace to rise through 2016, given ongoing low mortgage interest rates and healthy job creation,” Dietz said. 

The inventory of new homes for sale rose to 246,000 in March, which is a 5.8-month supply at the current sales pace although a normal level of upward of seven months.

The latest data show that the median sales price of new houses sold in March was $288,000, nearly 2 percent below last year’s level. 

Ralph McLaughlin, chief economist at Trulia, said that a better number to look at is the 12-month rolling total, which is up 8.9 percent.

“This reflects a steady increase in demand from homebuyers as well as increasing confidence of home builders,” McLaughlin said.

But he cautioned that new home sales still remain about 24 percent below the 50-year average.

Regionally, new home sales rose 18.5 percent in the Midwest and 5 percent in the South. Sales were unchanged in the Northeast and fell 23.6 percent in the West.

Last week, the National Association of Realtors said that existing homes rose 5.1 percent in March to a seasonally adjusted annual rate of 5.33 million, a stronger pace than the 5.07 million in February.

Sales increased  four major regions last month and are up modestly (1.5 percent) from March 2015.

“The choppiness in sales activity so far this year is directly related to the unevenness in the rate of new listings coming onto the market to replace what is, for the most part, being sold rather quickly,” said Lawrence Yun, NAR chief economist.

In another Commerce report last week, housing starts fell 8.8 percent to a seasonally adjusted annual rate of 1.089 million units in March.

But starts are up at a double-digit rate from a year ago and there is growing optimism that consumers will return to the housing market in the coming months.

“Single-family starts are off from their strong showing in February but this slowdown represents a return to a long-run, gradual growth trend that is consistent with builder confidence levels, which are overall positive,” Dietz said.