Sales of new homes posted a decline in March, but the drop was mostly attributed to the West, as other regions in the U.S. mostly saw gains, the Commerce Department reported Monday.
"Through some of the short-lived ups and downs in the data, it still appears that new home sales are trending higher over time," says Daniel Silver, an economist at JPMorgan in New York.
Read more: Fewer New Homes in the Pipeline
In the midst of the spring buying and selling season, new-home sales nationwide dropped 1.5 percent in March to a seasonally adjusted annual rate of 511,000 units. In the West, new home sales plunged 23.6 percent month-to-month (however, that follows a 21.7 percent increase in February). Sales soared 18.5 percent in the Midwest and 5 percent in the South, while staying mostly flat in the Northeast, the Commerce Department reported.
The median price of a new home sold in March was $288,000, about a 1.8 percent drop from a year earlier.
“It’s an indication that new homes are being offered at lower price points to attract first-time buyers,” says Jonathan Smoke, realtor.com®’s chief economist. About 37 percent of new-home sales in March were in the $200,000-$299,000 price range; about 13 percent were in the $150,000 to $199,999 range; and 17 percent were in the $300,000 bracket, according to the report.
Buyers may be getting more options. Inventories of new homes for sale climbed in March to the highest level since September 2009. Still, the stock of new homes is less than half of what it was at the height of the housing boom a few years ago. At the current pace, it would take 5.8 months to clear the supply of homes on the market.
“Builders are slowly raising inventory as they remain cautious about the housing recovery,” says Ed Brady, chairman of the National Association of Home Builders.
Source: National Association of Home Builders; “New-Home Sales Rise in March as Prices Drop,”realtor.com® and “New U.S. Home Sales Drop on Sharp Decline in the West,” Reuters