New Home Sales Experience ‘Surprising’ Boost
Despite the economic uncertainty that existed even before the White House announced new tariffs in early April, homebuyers appeared to take advantage of last month’s lower mortgage rates by snapping up new — and smaller — homes.
New home sales were at a seasonally adjusted annual rate of 724,000 in March, the highest rate since September 2024. Last month’s sales were up 7.4% compared to February and 6% compared to March 2024, according to the U.S. Census Bureau.
Mortgage rates hovered around 6.6% in March, the lowest in three months. Rates have fluctuated since the April 2 tariff announcements, with Mortgage News Daily estimating on April 22 that the 30-year fixed-rate mortgage was 6.98%.
New home prices continue falling: The median new home sales price last month was $403,600, a 1.9% drop from February and a 7.5% decline from one year earlier. March’s median price was “well below” that of three years ago, noted National Association of Realtors Chief Economist Lawerence Yun, a shift that suggests builders are focusing on smaller homes.
There was also a strong push last month for homes that sold for less than $300,000, as well as for those that sold in the $300,000 to $399,000 range, according to Joel Berner, senior economist at Realtor.com.
“This result is a bit surprising, given the doom and gloom statistics currently surrounding most of the housing market, but it is also a continuation of the trend we have seen in new-home sales in recent months, in which less expensive homes are driving sales activity,” Berner wrote in an April 23 blog post.
From a regional standpoint, the South remained a big driver of new home sales, accounting for about two-thirds of those recorded in March, Berner noted.
More options for buyers: Last month’s seasonally adjusted rate of new homes for sale was 503,000, up 7.9% compared to March 2024.
That’s good news for buyers looking for options, but could be short-lived depending on the impact tariffs have on building materials. Housing starts slowed in March, and builders have already started seeing costs rise amid price uncertainty and concerns over tariffs.
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