Sales of new homes across the United States increased sharply last month, according to fresh government data published Tuesday, though February’s numbers were revised lower.
There were 693,000 new single-family houses sold last month, the Commerce Department said in a statement, 8.8 percent above the revised February rate of 637,000.
The March data were well above market expectations of 670,000 new homes, according to Briefing.com.
Meanwhile, the median sales price of new homes sold in March was $430,700, while the average sales price was $524,800.
“Home sales surprised to the upside in March,” High Frequency Economics chief US economist Rubeela Farooqi wrote in a note to clients, adding: “The data can be volatile month-to-month and subject to revision.”
The Federal Reserve’s fight against inflation through interest rate hikes has pushed up the cost of mortgages for millions of Americans, reducing the incentive for existing homeowners to sell their property and take on new mortgages at higher rates.
That’s because US mortgages are typically given for 15 or 30 years — far longer than in many European countries — so people with existing fixed mortgages are likely paying much less than new entrants to the market, reducing their incentive to sell.
That has put the squeeze on sales of existing homes, increasing the demand for the new properties that do come to market.
“Our baseline assumes that new-home sales will edge slightly higher over the remaining three quarters of 2024,” Oxford Economics lead US economist Nancy Vanden Houten wrote in an investor note on Tuesday.
She added that “the recent backup in mortgage rates lends a downside risk to that forecast,” a likely reference to the recent rise in the US 30-year fixed mortgage rate back above seven percent, following a rise in bond yields.
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