Sales of previously unoccupied single-family homes rose in March, bringing the first three months of the year to the highest total since the third quarter of 2008.
Purchases of new homes gained 1.5% to 417,000 annualized units from the downwardly revised 7.6% drop to 411,000 in February, according to the Commerce Department. Economists had forecast 416,000 new sales, a 1.1% increase. Sales were 18.5% higher than a year ago, up from the 12.3% increase in February. Sales averaged 424,000 monthly at an annual rate January through March.
A shortage of new construction and close to record lows in mortgage rates have led to higher prices and the second shortest market supply at 4.4 months in almost eight years. Only January's 4.0 months was briefer. A normal market has about a six month supply of homes for sales.
The rate of new home construction has been far below its historical average for more than five years. In March construction began on 1.036 million dwelling annualized, the first month with more than a million starts in almost five years but still only 73% of the 1.414 million units average of the past thirty years. Since the beginning of 2009, new construction averaged only 656,000 units annually.
The median purchase price in March was $247,000, 3.0% higher than a year ago, though down 6.7% from the six year peak in February at $264,900.
Chief Market Strategist