Sales of new single-family houses in March 2011 were at a seasonally adjusted annual rate of 300,000, according to estimates released Monday by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 11.1 percent above the revised February rate of 270,000, but is 21.9 percent below the March 2010 estimate of 384,000.
"The fact that new-home sales have regained some of the ground they lost earlier this year is a promising sign at the start of the spring home buying season," said Bob Nielsen, chairman of the National Association of Home Builders (NAHB) and a home builder from Reno, Nev. "While potential buyers continue to be extremely cautious, they are starting to take a look around and evaluate their very good options with regard to attractively priced new homes."
"The March pace of new-home sales more accurately reflects current market conditions than the extremely low pace we saw in the first two months of this year, when unusually poor weather likely kept buyers away," said NAHB Chief Economist David Crowe. "That said, the average sales pace for the first quarter of 2011 held at about the same level seen for the last half of 2010. A limiting factor is the extremely thin inventory of new homes for sale, which is now at its second-lowest level in history. Builders continue to confront major challenges in obtaining financing to build new homes, and the shortage of new product makes it that much tougher for them to compete with existing homes on the market. At the same time, tighter lending conditions are making it more difficult for qualified buyers to obtain a mortgage."
New-home sales regained ground in three out of four regions this March. The Northeast posted a 66.7 percent gain from a very low sales pace in the previous month, while the Midwest posted a 12.9 percent increase and the West posted a 25.9 percent gain. Meanwhile, sales activity remained virtually unchanged in the South, with a 0.6 percent decline.
The inventory of new homes for sale fell to 183,000 units in March, which is the second-lowest level on record. This represents a 7.3-month supply at the current sales pace.