New US home sales jump to highest level since September

SALES of new homes in the US bounced back in March in a broad advance as prospective buyers toughed out high mortgage rates.

New single-family home sales increased 8.8 per cent to a 693,000 annual pace last month, the fastest since September, government data showed on Tuesday (Apr 23). Economists surveyed by Bloomberg gave a median estimate of 668,000.

The figures indicate that sales have somewhat stabilised in recent months, though the data are volatile. Underlying demand remains strong, but buyers are still constrained by high mortgage rates and prices, which are limiting the extent to which the housing market can gain momentum.

Inflation has proved stubborn in recent months, calling into question not only when the Federal Reserve will cut interest rates in 2024, but if it will at all. Mortgage rates above 7 per cent continue to plague existing-home sales, which are “stuck,” National Association of Realtors chief economist Lawrence Yun said last week.

While the resale market is struggling with a lack of inventory, builders are stepping in to fill the void. The supply of new homes for purchase rose to 477,000 in the month, the highest since 2008.

The report from the Commerce Department on Tuesday also showed the median sales price of a new house decreased 1.9 per cent from a year ago to US$430,700 in March. BLOOMBERG