March US New Home Sales Down 7%
In March, the sales of new homes fell by the largest amount in over a year. If a weatherman were predicting the housing market in the United States, then the forecast would be cloudy.
The Department of Commerce said Tuesday that sales were 7.1% lower in March, resulting in a seasonally adjusted annual rate of 328,000 units. In February, there was a 7.3% increase. The slump in sales in March likely reflect a warm winter that caused sales that normally occur in Spring to occur in February.
In March, the median sales price was $234,000, down 1% from the price in February. Sales of new homes are slightly under the 700,000 new homes per year pace that experts consider healthy. Not since 1963 has the supply of new homes been as low as it is today with just 144,000 new homes available for sale in March.
The main reason that sales of new homes are weak is that builders must fight for sales with homes that are foreclosed and selling short. A house sells short when mortgage holders permit homes to be sold for less than what is currently owed on the mortgage. In February, about one-half of the states reported spikes in foreclosure activity. Builders have stopped development of residential properties as the forecast is still cloudy.