New home sales measure the number of newly constructed homes with a committed sale during the month. The level of new home sales indicates housing market trends and, in turn, economic momentum and consumer purchases of furniture and appliances. Why Investors Care
| Released on 4/25/07 For Mar 2007 | ||||||||||||
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Highlights
New home sales data were mixed in March, edging up only a disappointing 2.6 percent to 858,000 but including a sharp drop in supply that will help to limit pressure on builders and prices. But annual unit rates for both February and January were revised lower by a net 21,000 units. The South and West saw mild declines in March while the Midwest showed a moderate gain with the Northeast showing a huge gain.
Supply fell back to 7.8 months from an extremely swollen 8.1 months in February. Year-on-year supply was down 1.4 percent in March for the largest drop on record. Slow sales and heavy supply haven't hurt prices which, at a median $254,000, were up 6.4 percent year-on-year and 0.9 percent on the month.
Though supply is down, the markets reacted initially to the soft sales levels with Treasuries firming and the dollar easing. March data, especially yesterday's existing home sales report, proved weak for the housing sector which is suddenly being hurt by tightening lending standards in fallout from subprime mortgage failures. But mortgage bankers' data, the latest set released this morning, show signs of stability so far in April.
New home sales have not shown the same resilience as existing home sales. New home sales fell 3.9 percent in February to an annual rate of 848,000 units - the lowest rate in nearly seven years. Also, supply jumped to 8.1 months - up from 7.3 months in January and 6.1 months in December and the highest level in 16 years. Weather effects were mixed in February with the Northeast and Midwest experiencing worse-than-usual winter while the West was warmer. Sales need to pick up before starts can do the same.
New home sales Consensus Forecast for March 07: 0.890 million-unit rate
Range: 0.850 million to 0.970 million-unit rate
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There is no question that lower interest rates boost home sales. Other factors also impact housing decisisions, such as employment and income growth, and wealth stemming from stock market gains. |
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