New Home Sales, commonly referred to as “new residential sales,” is an economic indicator that tracks the sale of newly constructed residences. It is extensively watched by investors since it is seen as a lagging signal of real estate market demand and, thus, a factor influencing mortgage rates. Household income, unemployment, and interest rates are all variables that influence it.
The United States Census Bureau releases two versions of the New Home Sales metric: a seasonally adjusted figure and an unadjusted one. The adjusted value is shown as a yearly total, whereas the unadjusted figure is presented as a monthly total. These numbers are provided for several areas and the entire nation.
New home sales are completed when a sales contract or deposit is signed or accepted. In any stage of construction, the home might be: not yet started, in the process of being built, or fully finished. About 10% of the US housing market is made up of new house sales. Preliminary numbers for new single-family home sales are subject to major changes because they are mostly based on data from construction permits.
New Home Sales Report for March 2023
New home sales have been on the rise for the fourth consecutive month, according to a joint report from the US Department of Housing and Urban Development and the US Census Bureau. The report reveals that sales of newly constructed homes were up 9.6% in March from February, indicating a possible stabilization of the housing market. However, sales were down 3.4% from a year ago.
The increase in sales is partly due to the easing of mortgage rates, which dropped towards the end of March after climbing through much of February. This resulted in an increase in mortgage applications. The uncertainty in the financial industry due to bank failures in mid-March was one factor that contributed to the drop in rates.
Despite the rise in sales, the median price for a new home also increased from February to March, reaching $449,800, up from $438,200 the previous month. This may be a setback for buyers who were hoping for more affordable options. In terms of inventory, the seasonally adjusted estimate of new houses for sale at the end of March was 432,000, down slightly from 436,000 at the end of February. This represents a supply of 7.6 months at the current sales rate, down from 8.2 months of supply the previous month.
Overall, the report indicates that new home sales are still facing some challenges, particularly in terms of affordability. However, the rise in sales is a positive sign for the housing market, and it will be interesting to see if this trend continues in the coming months. As the economy continues to recover from the pandemic and demographic trends shift, it will be important for builders, policymakers, and industry leaders to work together to ensure that the housing market remains strong and accessible to all.
The Federal Reserve's vigorous campaign of monetary policy tightening to slow the economy and manage inflation was having some desired effects on the housing market. A total housing market crash is improbable, however, while home values remain elevated and there is a severe dearth of previously owned properties.
New Homes Sold by Region
|Region||New Homes Sold|
Regionally, the data shows a mixed picture. Sales in the Northeast skyrocketed by a massive 170.8% to 65,000, while sales in the West rose by 29.8% to 161,000. In the Midwest, sales increased by 6% to 71,000. However, sales in the South, the largest region for new home sales, fell by 5.4% to 386,000.
The median sales price of new homes sold was $449,800, while the average sales price was $562,400. This represents an increase from the median sales price of $435,900 and the average sales price of $511,800 recorded a year ago.
Inventory levels of new homes for sale dropped slightly from the previous month, with 432,000 homes left to sell, corresponding to 7.6 months of supply at the current sales rate. This is the lowest level of inventory since April of 2022.
Overall, the data suggest that new home sales are picking up momentum, with buyers looking to new construction as an alternative to the tight inventory of existing homes for sale. The surge in sales in the Northeast and West regions is particularly notable and may reflect a shift in buyer preferences towards suburban and rural areas. However, the fall in sales in the South may reflect a more competitive market or a shift in buyer demand toward other regions. The increase in median and average sales prices may also reflect rising construction costs and demand for larger, more luxurious homes.
New Home Sales Trend [Previous Months]
Here's the region-wise tabular data for new home sales from October 2021 to 2022. The units displayed are in thousands and are the seasonally adjusted annual rate. The data estimates only include new single-family residential structures. Sales of multi-family units are excluded from these statistics.
NORTHEAST: Connecticut, Maine, Massachusetts New Hampshire New Jersey New York Pennsylvania Rhode Island Vermont
MIDWEST: Illinois, Iowa, Indiana, Kansas, Michigan, Minnesota, Missouri, Nebraska North Dakota Wisconsin South Dakota Ohio
SOUTH: West Virginia, Virginia, Texas, Tennessee, South Carolina, Oklahoma, North Carolina, Mississippi, Maryland, Louisiana, Kentucky, Georgia, Florida, Alabama, Delaware, District of Columbia, Arkansas
WEST: Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana, Nevada, New Mexico, Oregon, Utah, Washington, Wyoming