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West Drives New Home Sales to Post-Crisis High

Mortgage News

Fueled by the West, the number of new homes sold last month was more than during any month since the financial crisis. Sales in the Northeast, however, suffered.

Sales of new U.S. single-family
homes came to 68,000 units in March — the single biggest month for new home sales since July 2008, when the total was  also 68,000.

The data, jointly reported Tuesday by the Census Bureau and the Department of Housing and Urban Development, indicate so far this year,
172,000 new homes have been sold.

A more closely watched metric, the seasonally adjusted annual rate
of new home sales, was 694,000 last month, rising 4 percent from the upwardly revised level for February and nearly 9 percent better than the upwardly revised rate for March 2017.

Tendayi Kapfidze, chief economist at LendingTree, said in a written statement that he prefers a three-month average to balance timeliness with information value. That average, 668,000, “is at the highest level since the financial crisis and encouraging for further growth.”

National Association of Home Builders Senior Economist Michael Neal noted in a written statement, “With nationwide economic growth and favorable demographics, we can expect continued strengthening of the housing market across the country.”

The month-over-month gain was driven by sales in the West, where the seasonally adjusted annual rate soared more than 28 percent
from a month earlier to 222,000.

NAHB’s Neal explained that the strength in the West can be linked to faster population growth, a healthy employment market and brisk single-family construction.

Kapfidze explained that low inventory is a particular challenge in the West .

The West’s gain had been expected by Genworth Mortgage Insurance Chief Economist Tian Liu, who anticipated “new home sales activity [would] be strong in March, especially along the West Coast.”

A less than 1 percent rise put the rate in the South at 371,000.

The Midwest was off more than 2 percent to an 82,000 annual rate, while the Northeast’s rate was 19,000, plunging from February by 55 percent — the worst of any region.

LendingTree’s  Kapfidze noted that Northeast’s decline was the third largest on record since at least 1973.

“While weather was unfavorable, it is not a sufficient explanation for the decrease which is likely a data problem,” he said.

At the end of last month, a seasonally adjusted 301,000 new homes were for sale. That came to 5.2-month supply.

March 2018’s median sales price was $337,200, and the average price was $369,900.

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