New single-family home sales surged in March as housing demand was supported by low interest rates and strong consumer demand, despite the ongoing building materials challenges impacting the housing industry.
The U.S. Department of Housing and Urban Development and the U.S. Census Bureau estimated sales of newly built, single-family homes in March at a 1.02 million seasonally adjusted annual pace, a 20.7% gain over upwardly revised February rate of 846,000 and is 66.8% above the March 2020 estimate of 612,000. This is the strongest seasonally adjusted annual rate since September 2006.
The gains for new home sales are consistent with the NAHB/Wells Fargo HMI, which edged up to 83 in April, demonstrating that housing is a leading sector for the economy. Consider that despite elevated unemployment, new home sales are estimated to be 34.4% higher for the first three months of 2021 compared to the first three months of 2020.
Sales-adjusted inventory levels declined again, falling to a just a 3.6 months’ supply in March. The count of completed, ready-to-occupy new homes is just 37,000 homes nationwide. Total inventory declined 44.6% year-over-year, with inventory down to 307,000.
Moreover, sales are increasingly coming from homes that have not started construction, with that count up 150% year-over-year, not seasonally adjusted (NSA). These measures point to continued gains for single-family construction ahead.
Regionally on a year-to-date basis, new home sales declined 3.3% in the West, and rose in the other three regions, up 36.6% in the Northeast, 53.9% in the Midwest and 50.5% in the South.