Washington (AFP) – US new home sales leapt to a four-month high in March, and sales in the prior months were revised up to reverse the initial weakness, according to government data released Tuesday.
The result suggested the housing market is tightening further, as supplies winnow and prices rise.
But the jump in March in the highly volatile figures was entirely driven by sales in the West, with home-buying stagnating or falling in the rest of the country.
The total sales of newly-constructed houses rose four percent to an annual rate of 694,000 units, seasonally adjusted, the highest level since November and handily overshooting economists’ expectations.
The results for January and February, which had shown a steady weakening, were upgraded by a combined 71,000 units, turning what had been two months of declines into three months of gains.
Sales jumped 28.3 percent in the West to an annual rate of 222,000 units, but they plunged 54.8 percent in the wintry Northeast. Elsewhere sales rates were little changed.
Officials say however that the monthly figures are subject to significant revision. The March figures were all well within broad margins of error.
– Rising rates? –
Ian Shepherdson of Pantheon Macroeconomics cautioned against expecting sustained gains, with interest rates likely to make some would-be homeowners reluctant to borrow.
“The bad news is that the weakening of mortgage applications in recent months suggests that new home sales are likely to fall in the second quarter, returning to the low 600s,” he said in a client note.
The Federal Reserve is expected to raise the benchmark lending rate, that impacts mortgages, twice more this year after the increase in March. But many economists expect three more rate hikes.
A 60-basis-point increase in mortgage rates since September is “biting,” Shepherdson added, “and rates are likely to rise further over the next couple of weeks, in response to the jump in Treasury yields.”
The median new home price rose 3.5 percent to $337,200, the highest since December, while the average price moderated by 0.2 percent to $369,900, pointing to somewhat cooler prices at the higher end of the market.
Meanwhile, despite the robust sales activity, the stock of homes for sale was unchanged from February at 301,000 units as new homeowners snatched up houses as fast as builders could add them to the market.
But the new sales pace put supplies at only 5.2 months, down 3.7 percent from March and the lowest since November.
Builders for months have reported for months difficulty finding enough workers to keep up with their projects, which could hamper the pace of construction.