New Home Sales Blow Past Estimates in March, Up 9.6%

© (RJ Sangosti/MediaNews Group/The Denver Post/Getty Images) MESQUITE, NEVADA - APRIL 13: A construction worker installs windows at a new home in Sun City Mesquite, an active adult community, on April 13, 2023 in Mesquite, Nevada. The community located in the desert hills north of Mesquite is built around an 18-hole golf course and a clubhouse with a large indoor and outdoor pool. As climate change continues to lower water flows in the Colorado River many are worried growth will in the southwest may exceed the amount of water the river will provide. (Photo by RJ Sangosti/MediaNews Group/The Denver Post via Getty Images)

Sales of new homes defied gravity in March, increasing 9.6% instead of falling by 1.6% as had been expected, the Census Bureau and Department of Housing and Urban Development said on Tuesday.

Economists had projected an annual sales rate of 630,000, down from 640,000 a month earlier, but instead the estimate came in at 683,000, compared to a revised 623,000 in February.

Sales are still off 3.4% from March 2022, however.

Prices, meanwhile, rose to a median of $449,800, up from 438,200 in February.

The housing market, a pillar of strength during the coronavirus, has slowed markedly since mid-2022 as higher mortgage rates and a shortage of inventory has affected sales. However, demand remains high and buyers have responded to builder incentives and other programs such as mortgage buydowns.

Much of the gain came from sales in the Northeast, perhaps because of weather-related issues.

“Despite signs of economic uncertainty in March, which included news of bank failures, buyers are still showing demand for new homes,” said Kelly Mangold of RCLCO Real Estate Consulting. “There is a cohort of buyers who would have preferred to move sooner and are now making the decision after an extra year or two of saving and possibly adjusting their expectations.”

“Demographic drivers remain strong as more households move into family years, and remote and hybrid work continue to have a foothold in many industries, driving buyers to seek space for extra bedrooms and/or office space in their homes,” she added.

Earlier Tuesday, S&P Corelogic Case-Shiller reported that prices rose 0.2% in March, bucking a seven-month downward trend with Sun Belt cities such as Miami, Tampa and Atlanta leading the way.

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