US new-home sales climb to 8-month high in March

Elizabeth Williams
April 26, 2017

Economists expect new home sales to continue to increase this year as builders step up construction of single-family homes and more first-time buyers come back into the starter-home market.

New-home sale rose 5.8 percent in March, according to the U.S. Commerce Department.

The median sales price for a newly built home rose just over 1% from a year ago to $315,100. New home sales have increased every month so far this year, and were up 15.6% year-over-year in March, slightly more than the margin of error in the report.

The Commerce Department said new home sales jumped by 5.8% to an annual rate of 621,000 in March from a revised 587,000 in February.

The Atlanta Federal Reserve is forecasting gross domestic product rising at a 0.5 percent annualized rate in the first quarter after increasing at a 2.1 percent pace in the final three months of 2016.

Homebuilding helps to feed growth across the economy. New home sales are benefiting from a shortage of properties in the market for previously owned homes.

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The acceleration came as the volume of new houses for sale reached its highest level in almost eight years, pointing to homebuilders' efforts to meet consistently strong demand in a tight market.

Sales of new homes increased sharply for the third consecutive month in March, an indication that demand is picking up as the crucial spring selling season heats up.

New-home sales jumped in March in the Northeast and West, grew modestly in the South and fell in the Midwest.

Residential construction firms have added 112,600 workers over the past year, a 4.2 percent increase. The 30-year fixed mortgage rate is now averaging around a five-month low of 3.97 percent.

Mortgage had been climbing after President Donald Trump won the November election, under the belief that the government would engage in forms of stimulus such as tax cuts and greater deficits that could cause higher levels of inflation. The average is now at its lowest level in five months.

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