March was another solid month for newly built residential home sales, as the new construction market bounced back from a disappointing February.
After a disappointing February, the sales of new single-family homes returned to form in March, with sales increasing 1.5 percent from February and 18.5 percent from March 2012, according to the latest numbers from the U.S. Census Bureau.
All told, sales were at a seasonally adjusted annual rate of 417,000, up from 411,000 in February.
New Home Prices Down, Inventory Stable
Interestingly, though sales rose in March, both average and median sales prices declined:
- The median sales price for new home sales fell 6.7 percent from $264,800 to $247,000, while the average price declined 10.7 percent from $313,700 to $279,900.
- New housing inventory, meanwhile, remained consistent, holding at a 4.4-months supply.
Staying Focused on the ‘Distressing Gap’
As we highlighted last week, the “distressing gap,” or the gap between new home sales and existing-home sales, will be the key metric to watch during the housing recovery.
During the downturn years, the rise in delinquencies and foreclosures generated an exponential increase in distressed property sales (and thus, the existing-home sales market), and as a result, while new home sales continue to fall (resulting in the 12.1 months of supply), existing-home sales stayed unnaturally high, as more and more short sales and REO sales were completed (here’s an excellent graph demonstrating the split from Bill McBride of Calculated Risk).
But now that the REO/short sale markets are quickly drying up, thanks to surging investor activity in 2011 and 2012, new single-family home sales are starting to come back, and the spread between existing-home sales and new home sales should grow thinner and thinner as housing continues to recover.