The pace of new single-family home sales in March was effectively flat, as builders continue to add inventory.
According to estimates from the Census Bureau and HUD, new home sales declined 1.5% to a seasonally adjusted annual rate of 511,000 from an upwardly revised February pace. The March rate was 5.4% higher than a year ago.
Total inventory rose to 246,000 homes in March, up from 205,000 a year prior. At the March sales pace, the current inventory marks a 5.8 months supply, compared to 5.1 months from March of 2015.
Looking at the components of inventory, in March there were only 56,000 completed, ready-to-occupy homes for sale. There were 149,000 homes under construction and another 41,000 single-family residences listed in inventory that had not yet begun development.
The median months for sale measure has been rising since December of last year, now standing at 4.1 months, the highest since the summer of 2013. The median sales price for new home sales was $288,000 in March, down slightly from a year ago ($293,400). Months on market should fall as new homes are able to effectively compete against existing homes at lower price points. For example, there was a 20% year-over-year gain in sales in the $200,000 to $300,000 range in March.
The regional sales estimates contain a fair amount of statistical error each month, so the monthly changes should be interpreted with caution. On a three-month moving average basis, sales were up 30% in the Northeast, 10% in the Midwest and 15% in the South. Sales dropped 20% in the West.