New Home Sales up by a Remarkably Strong 9.6 Percent in March

Sales of new homes shot up in March by a robust 9.6 percent — the highest sales rate of the last 12 months.

By Manuel Gutierrez, Consulting Economist to NKBA

Sales of new homes shot up by a remarkably strong 9.6 percent in March, reaching a 683 thousand units annual sales rate. This is the highest sales pace since March of last year, when the rate was 707 thousand. New home sales have been recovering, more or less steadily, since July of last year, when the rate was 543 thousand.

• New home sales rose in three of the four regions in March. Sales in the West — a region that traditionally accounts for nearly a quarter of new homes sold — rose by 30 percent to a rate of 161 thousand, followed by the Midwest, up 6 percent to a rate of 71 thousand. The Northeast, typically the smallest region, saw a jump of 171 percent to a rate of 65 thousand. The South, the largest region since 2005, saw sales fall by 5 percent to a rate of 386 thousand. Nevertheless, the South still accounted for 57 percent of sales.

• In the first quarter of this year, 180 thousand new homes were sold  —  14 percent less than in the same period last year. Compared to the first quarter of last year, sales were up only in the Northeast by 20 percent to 12 thousand homes sold. In the West, they were down 31 percent to 38 thousand, while in the Midwest they were down 22 percent to 18 thousand, and in the South were down 6 percent to 113 thousand.

• There were 425 thousand new homes for sale in March, the same as in the previous month, but 19 thousand more than in inventory a year earlier. Most of them, 59 percent of the total, were in the South, and 24 percent were in the West. Thus, these two regions held 83 percent of the nation’s inventory.

• However, 22 percent of the builders’ inventory this March were houses that had not been started yet, and 62 percent were houses still under construction. Just 16 percent of the inventory were “ready to move in” homes that were completed.

• The median price of new homes sold in March was $432 thousand, 3.8 percent higher than in the previous month and 3.2 percent higher than a year earlier. For regions, new home price data is available only on a quarterly basis. In the Northeast, the median price increased by 12 percent between Q1 2022 and Q1 2023. This was followed by increases in the West (8 percent) and the South (6 percent). The Midwest saw a decline of 5 percent.