March 2018 New Home Sales

Sales of new homes moved higher in March 2018 according to the Census Bureau.  This uptick follows the existing home sales tally.  Transactions for new single-family homes reached a seasonally adjusted annual rate of 694,000 compared to 667,000 in February.  This increase puts the pace of sales near the best levels of the current economic expansion which was set in November of last year.  Additionally, revised figures for the first two months of this year added another 71,000 units sold thus far in 2018.

Price proxies were mixed.  The median home cost the buyer $337,200 versus $325,800 in February, an increase of 3.5 percent.  However, an average priced home was virtually unchanged, declining marginally to $369,900, from $370,800 in the prior period.

Inventory figures were also mixed.  There were 297,000 homes for sale in the period, unchanged from a month earlier, since the number of homes sold increased, the inventory to sales ratio fell.  At the current transaction pace, the entire stock of homes would be depleted in just 4.4 months if no other homes are built.  This measure of supply was 5.3 months in February and as high as 6.6 months as recently as December.

New housing sales were relatively strong in the first quarter of 2018.  Strength in this portion of output bodes well for many other areas of the economy.  When folks buy new homes, the builder is not the only beneficiary.  Often knock-on purchases follow (e.g., furniture, appliances, alarm systems, etc.) which add to the health of America’s economy.