Installing security contractors that look to the spring home-buying season as a general market indicator are going to be a bit chagrined. The Commerce Department’s latest numbers show sales of new U.S. single-family homes fell to their lowest level in eight months in March. So much for a speedy rebound for a sector that began to soften last summer.
Traditionally, home sales can be expected to improve with the arrival of spring as prospective buyers venture into the market. Not so much this year. Sales of new single-family homes fell 14.5% last month to a seasonally adjusted annual rate of 384,000, the Commerce Department reported Wednesday.
That marked the second straight monthly decline and the lowest rate since July 2013. The median forecast of 74 economists surveyed by Bloomberg News called for the pace to accelerate to 450,000.
Regionally, sales nosedived in the Midwest, South and West in March. However, they rebounded in the Northeast where fiercely inclement weather in previous months curtailed purchases. While severe weather can be blamed for the weak housing data at the beginning of the year, economists are pointing to the increasingly high cost of housing for this latest slowdown. Many would-be buyers have struggled to adjust after prices surged and mortgage rates increased last year.
All told, new-home sales have dipped 13.3% over the past 12 months, marking the largest year-on-year decline since April 2011, according to Commerce Department data.
In a press statement, National Association of Realtors (NAR) President Steve Brown said first-time buyers in particular have been stuck in a rut. “There are indications that the stringent mortgage underwriting standards are beginning to ease a bit, particularly regarding credit score requirements, but they remain a headwind for entry-level and single-income home buyers,” he said.
Among other indicators that illustrate a subdued housing market last month, NAR said this week that sales of existing homes declined 0.2% to a seasonally adjusted annual rate of 4.59 million. It was the seventh drop in the past eight months. The National Association of Home Builders/Wells Fargo Housing Market Index (HMI), which tracks builder sentiment, registered 47 in April. Readings below 50 indicate that more builders view sales conditions as poor rather than good.