WASHINGTON — Sales of new single-family homes rose in March after a substantial drop in the prior month, signaling restarted momentum in the housing market, according to data released Tuesday.
The U.S. Department of Commerce reported that the seasonally adjusted annual rate of new-home sales rose 1.5 percent to 417,000 in March from 411,000 in February. Economists polled by MarketWatch had expected the rate to rise to 421,000 in March.
With near-record-low interest rates continuing to support affordability, sales were 18.5 percent higher than during the same period last year, and economists expect the housing market to continue to gain momentum this year. There's room to grow: Despite last month's gains, the sales rate remains far below a peak of almost 1.4 million in 2005, though that bubble level is far higher than economists say is healthy.
"High affordability and low interest rates continue to support the ongoing housing sector recovery, but we continue to note that improvement in the housing sector remains quite gradual," said Gennadiy Goldberg, U.S. strategist at TD Securities.
Tuesday's report echoes other recent data pointing to the housing market's ongoing recovery. The National Association of Realtors reported Monday that existing-home sales declined in March, but were up 10.3 percent from the same period in the year before.
Regionally, results were mixed in March, with sales up 21 percent in the Northeast and 19 percent in the South. Meanwhile, sales fell 21 percent in the West and 12 percent in the Midwest.
The median sales price fell 6.8 percent in March from February — the largest drop since February 2011- but was up 3 percent from the same period in the prior year. Despite the year-over-year gain, data show that prices remain far below bubble peaks.
There was a 4.4-month supply of new homes available for purchase at March's sale pace, matching February's supply ratio. Ongoing low inventory levels are supporting price increases.
With few homes for sale, intense competition in certain markets is keeping some would-be buyers, including those looking to purchase their first home, from participating in the market. Overly stringent lending standards are also preventing some worthy borrowers from obtaining mortgages, economists say.