Sales of new single-family homes surged in March, surpassing all economist forecasts, adding to a series of backstreet surprises in recent economic data.
New home sales increased 7.4% from an annual rate of 724,000, according to the US Census Bureau and the Department of Housing and Urban Development. That figure not only won the consensus estimate of 682,000, but also broke through the full range of economist forecasts from 650,000 to 700,000. Sales figures for February also slightly surpassed 676,000 to 674,000.
Sales jumps, driven primarily by activities in the South, occur despite growing concerns about economic growth, rising mortgage rates and slipping consumer sentiment. This will be added to the list of increasing hard metrics, including strong employment and robust consumer spending, which demonstrates continued resilience in the US economy.
The median sale price for new homes fell 7.5% from the previous year, down to $403,600, reflecting an increase in supply at lower prices. This is a relief, especially for the Trump administration policy maker working on planning to make the home more affordable, especially for young families who make up the majority of first-time home buyers.
The average selling price was $497,700. Stock has been scored a check mark for up to 503,000 sales. It is the highest since 2007 and represents 8.3 months of supply at its current sales pace.
This data suggests the continued strength of housing demand into the spring sales season, challenging the expectations that stricter credit conditions and higher interest rates will significantly weaken activity.
The new home sales data follows a series of reports that are stronger than expected than expected for employment, durable goods and consumer spending. Taken together, this indicator suggests that the actual economy remains strong despite the more careful financial markets and forecasting models.
