New-home sales in U.S.
Strong demand and very tight supply are feeding growth across the country.
WASHINGTON — U.S. sales of new homes shot up in March to the fastest pace in 8 months, as more Americans are upgrading their houses in a positive sign for the broader economy.
The Commerce Department said this past week that newhome sales rose 5.8 percent last month to a seasonally adjusted annual rate of 621,000, the highest rate since July last year. Sales are running 12 percent higher during the first three months of this year than during the same period in 2016.
Homebuilding helps to feed growth across the economy. Housing starts and new-home sales are climbing amid a shortage of existing homes on the market, generating gains in construction jobs and sales of building materials. The real estate sector is still recovering from the bursting of the housing bubble a decade ago, with sales last month on pace to more than double the total for all of 2011.
“Strong demand from home buyers and very tight supply conditions in the overall housing market are fueling demand for new homes,” said Tian Liu, chief economist at Genworth Mortgage Insurance. “In addition, prices on new homes are stabilizing, suggesting more affordable homes are coming to the market, which will help builders capture more demand from first-time homebuyers.”
The median sales price has increased just 1.2 percent over the past year to $311,400 in March.
New-home sales jumped last month in the Northeast and West, grew modestly in the South and fell in the Midwest.
Residential construction firms have added 112,600 workers over the past year, a 4.2 percent increase. Still, there are fewer residential construction jobs than in the middle of 2008 when mortgage defaults began to trigger a financial market crisis.
Some of the gains for new housing reflect a lack of supply of existing homes on the market. Even as sales and prices of existing homes have risen, the available inventory has fallen 6.6 percent over the past year to 1.83 million properties. This means there are essentially more buyers chasing fewer properties, causing prices to rise and making new construction an attractive choice.
“Strong demand and very tight supply are fueling demand for new homes.”
Tian Liu, economist