The annualized rate of new home sales dropped in March to 481,000 from an upwardly revised February rate of 543,000, which was a seven year high. While the March figure was 11.4% below February, it was also 19.4% above March 2014 when the housing market and the entire economy were suffering from an unusually cold winter. First quarter sales are still better than any first quarter since 2008.
The South region took the largest beating by falling 50,000 sales or 15.8% from February, representing 80% of the US decline. The Northeast fell the most in percentage terms, 33.3%, but did less damage to the US trend because it is has the smallest number of sales of the four census regions. Inventories rose again to 213,000, equal to the January level and the highest in almost five years.
Builder confidence improved in the April NAHB/Wells Fargo Housing Market Index and their expectations for future sales rose by 5 points to 64. Mortgage rates remain well below 4%, existing homes sales have improved significantly and mortgage applications for purchase have steadily increased. Future home sales are expected to continue a modest upward trajectory, but improvement is contingent on continued improvement in jobs and incomes.