WASHINGTON — Sales of new U.S. homes increased 4.5% in March, the third straight monthly gain as the housing market appears to be cautiously recovering from a mortgage rate spike last year that caused homebuying to slump.
The Commerce Department said Tuesday that new homes sold at a seasonally adjusted annual rate of 692,000 in March, up from 662,000 in February. For the first three months of 2019, new-home sales were 1.7% higher than the same period a year ago.
Yet the housing market has been uneven in recent months, a sign that years of price gains have hurt affordability and that lower mortgage rates can only remove a degree of the pressure from higher costs. Sales of existing homes — which make up the bulk of purchases — plunged 4.9% in March, the National Association of Realtors said Monday.
In Maine, after leveling off in January and February, home values began to decline slightly in March compared with a year earlier, reversing an upward trend that had lasted about three years. The number of home sale transactions in Maine also fell compared with a year earlier, continuing a downward trend over the past few months.Before March, the last time both home sales volume and median sale price experienced a year-over-year decline in Maine was more than four years ago, in November 2014.
Maine is coming off a record year for home prices in 2018, and this year is expected to remain nearly as good for sellers. However, the buying frenzy of 2018’s spring and summer seasons has been slowly winding down as more potential buyers choose to take a wait-and-see approach. Many have become frustrated after losing out on multiple offers or failing to find a desirable property in their price range.
March’s sales pace for new homes nationally was the strongest since November 2017, a sign that the market for newer properties is building some momentum. New-home sales began to rebound after the average 30-year mortgage rate fell from its recent peak of nearly 5% in November 2018.
“Homebuilders continue to indicate encouraging orders and traffic trends, crediting the drop in mortgage rates with re-energizing housing demand,” said Stephen Stanley, chief economist at Amherst Pierpont Securities. “The next 2-3 months will be critical, as the spring selling season will be a telling test of whether housing demand is truly firming.”
The median sales price of a new home in February tumbled 9.7% to $302,700.
Price pressures are creating a search for more affordable options.
In March, 16% of new-homes were sold for less than $200,000. This was marked increase from 2018, when just 12% of new homes sold for less than $200,000. Still, monthly sales figures can be volatile and the industry’s preference for more profitable homes at higher prices could cause that share to dip in the coming months.
Send questions/comments to the editors.
