The U.S. Census Bureau and the U.S. Department of Housing and Urban Development (HUD) have released updated residential sales statistics for March 2023, at a time when many Americans are struggling to navigate challenging economic conditions characterized by high mortgage rates and steep home prices.
Mark Palim, Deputy Chief Economist at Fannie Mae, noted that new single-family home sales increased by 9.6% in March, reaching a seasonally adjusted annualized rate of 683,000, which surpassed expectations and represented the strongest pace in a year. The report also indicated that the supply of units for sale at the current sales pace decreased by eight-tenths to 7.6 months, representing the lowest level in a year. Palim highlighted that the March data underscored the resilience of the new home market, despite ongoing affordability challenges, as the limited supply of existing homes has prompted numerous potential buyers to contemplate new homes as a substitute.
The U.S. Census Bureau and HUD have released joint estimates indicating that in March 2023, new single-family home sales were at a seasonally adjusted annual rate of 683,000. March 2023 witnessed a 9.6% increase in new single-family home sales from the revised February rate of 623,000, although it was still 3.4% lower than the March 2022 estimate of 707,000. In March, the typical sales price of newly sold homes was $449,800, whereas the mean sales price was $562,400. At the end of March, approximately 432,000 new homes were available for sale, with a 7.6-month supply at the current sales rate.
According to Palim, the recent increase in sales of homes that have not yet been started implies that single-family housing starts will likely rise in the near future. However, he also expressed concern that the banking turmoil in March may result in a decrease in construction lending, which could negatively impact both new home construction and sales. Despite this potential challenge, Palim believes that homebuilders will continue to offer incentives such as mortgage rate buydowns to sell their elevated levels of completed homes. Nevertheless, he notes that the current high demand may reduce the need for these incentives in the future.