ConDig (23-Apr-24). Sales of new single-family homes surged 8.8% in March to a 693,000 seasonally adjusted annual rate from a downwardly revised reading in February, according to latest figures from the Commerce Department.
But new home sales remain under pressure amid higher interest rates, while mortgage rates moved above 7% this month, which is expected to moderate sales and increase the use of builder sales incentives this spring, the National Association of Home Builders (NAHB) reported.
“Although consumer demand has been somewhat dampened due to higher interest rates, builders continue to supply new homes to the market to lift inventory to make up for the low resale supply,” said Carl Harris, chairman of the NAHB.
“Rates moving above 7% however, will move some home buyers to the sidelines as the spring progresses.”
New single-family home inventory in March remained elevated at a level of 477,000, up 2.6% from February. This represents an 8.3 months’ supply at the current building pace, which has been supported by the ongoing shortage of resale homes.
Data from the National Association of Realtors indicate just a 3.1 months’ supply of existing single-family homes in March, with a balanced market holding 5 to 6 months’ supply. Inventory of newly-built single-family homes is up 10.2% on a year-over-year basis.
“Shelter inflation remains the largest, lingering obstacle to lower inflation,” said NAHB chief economist Robert Dietz. “More housing supply will ultimately tame shelter inflation growth and lower interest rates. This will improve the cost of financing for land developers and home builders and enable more attainable housing supply.”
The comments comes as Homebuilder PulteGroup said Tuesday that a chronic housing shortage in the US presents the company with an opportunity to grow its market share.
“After more than a decade of underbuilding, it is estimated that our country has a structural shortage of several million homes,” PulteGroup ceo Ryan Marshall said.
“Our strong financial performance reflects both favorable demand conditions and our balanced operating model that allows us to more effectively meet the individual needs of first-time, move-up, and active-adult consumers.”
Earlier this month, the U.S. Census Bureau reported that construction of new homes in the US crumbed month-on-month in March as the house building industry continued to battle the crippling effects of spiraling inflation.