New-home sales rose 1.5 percent in March, and economists predict more increases ahead as housing likely remains a consistent driver of economic growth this year, The Associated Press reports.
“With increasing signs of a softer U.S. economy springing up in the spring, we can take comfort in the resilience of the housing recovery,” Jennifer Lee, senior economist at BMO Capital Markets, told The Associated Press. Record low mortgage rates and steady job creation are attributed to helping lifting home sales.
The Commerce Department reported Tuesday that sales of new homes reached a seasonally adjusted annual pace of 417,000 in March. The pace marks an 18.5 percent gain compared to last year, but the numbers are still far below the 700,000 pace that most economists consider healthy for the sector.
“At this point, we are about halfway back to what would be considered a ‘normal’ level of sales activity as challenges related to supplies of credit, building materials, lots, and labor are slowing the pace at which builders can build and sell new homes,” says David Crowe, chief economist for the National Association of Home Builders.
Regionally, new-home sales rose the most in the Northeast by 20.6 percent in March, followed by a 19.4 percent gain in the South. Sales dropped 20.9 percent in the West and fell by 12.1 percent in Midwest, the Commerce Department reported.
Inventories of new homes remain tight, but did rise 2 percent in March, marking a second consecutive monthly gain. Inventories are at about a 4.4 month supply at the current sales pace.
The tight inventories are causing home prices to rise. The median price of a new-home increased to $247,000 in March — 3 percent higher than a year ago.
The low inventories are spurring more construction of homes, with homebuilders having started work on more than 1 million new homes and apartments in March.
Source: “New-Homes Sales Rose in March,” The Associated Press