ARLINGTON, Va.—New home sales increased 9.6% in March to 683,000 annualized units, while sales in February were revised down 17,000 units.
Despite being down 3.4% from a year ago, NAFCU Chief Economist and Vice President of Research Curt Long noted “new home sales soared in March, reaching their highest level since one year earlier and falling just shy of pre-COVID sales levels.”
“After declining in every month in 2022, homebuilder sentiment has increased each month in 2023 through April,” Long said. “Supply is in better condition in the new home market than in existing homes, and the former is helping to sop up some of the housing demand that the resale market is unable to meet. Nevertheless, new home supply is beginning to fade."
Decrease in Supply
Based on current month sales, there were 7.6 months of supply in March – a 0.8-month decrease from February. The number of unsold homes left on the market decreased by 2,000 homes to 432,000, representing a 5.1% increase from inventory levels a year ago.
Sales were mostly positive across the census regions in March, with the Northeast leading with a whopping 170.8% increase, followed by the West (+29.8%) and the Midwest (+6%). Sales in the South fell 5.4%.
‘Strong Demand’ for Rest of Year
Of note, the median new home price, non-seasonally adjusted, increased 3.8% in March to $449,800 – 3.2% higher than a year earlier.
“Strong demand and a normalizing supply chain should spur construction over the rest of the year,” Long said. “It is estimated that residential investment was a small drag on GDP in the first quarter, but it should contribute to overall growth over the second half of 2023.”