New home sales plunged an unexpected 14.5 percent in March to a 384,000 unit pace, the lowest level in eight months. With the exception of the Northeast, all regions saw double-digit declines.
New Sales Plummet in March
New home sales dropped a more-than-expected 14.5 percent in March while forecasts were looking for a small pickup on the month. Weak builder sentiment and still-tight credit conditions continue to suggest sales activity will be challenged during homebuying season. One bright spot was the jump in inventories, which reached its highest level since late 2010. Median home prices also rose more than 11 percent yr/yr.
Builder Confidence Remains Low
One tell-tale sign of the slower pace in new home sales activity is builder confidence. Sentiment has been stuck in a narrow band over the past three months, but remains below the key threshold of 50 where more builders see conditions as “good” than “poor.” Moreover, prospective buyer traffic has also remained at a low level. We suspect weather is still playing a role in the tepid pace of sales activity, but reports in April and May will confirm.
Wells Fargo