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First Cut: March sales of new single-family homes puts the spring buying season off to a good start

Sales of new single-family homes were up 4.5% in March to 692,000 after 662,000 in February and were up 3.0% compared to March 2018. The spring homebuying season was off to a good start for new construction across price ranges but particularly for homes priced under $400,000.

Home sold during the period were 200,000 for construction not yet started (up 13.0% month-over-month), 229,000 for those under construction (up 3.6%), and 263,000 for those completed (down 0.4%). Consumers are turning to new building due to limited supplies in existing housing stock, especially in the more sought-after size and/or price ranges.

The supply of homes on the market slipped to 6.0 months’ worth in March from 6.3 in February and was the lowest since 6.0 in May 2018. Supplies are better than they are for existing units.

Sales were up in three of four regions. There was a 17.6% jump in the Midwest that was probably related to a rebound after severe weather conditions in January and February. Sales were up 6.7% in the West, continuing the recovery after wildfires destroyed homes in October. Sales were 3.6% higher in the South at the opening of the spring buying season. The Northeast saw a 22.2% decline which followed on a burst of buying in February when mortgage rates were falling.

Consistent with sales of smaller and lower-priced homes, the median price was down 4.0% in March from February and off 9.7% from a year-ago. The average price was down 2.4% month-over-month but up 1.8% compared to March 2018.

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