Blame the Weather: New Home Sales way up

New home sales rose by much more than forecasts, surging 26.9% in March to 411,000 units (sales in February were upwardly revised to 324,000 from an initially reported 308,000). Sales rose in all major areas with the largest gains seen in the Northeast (+35.7%) and in the South (+43.5%).

The supply of new homes fell 2.1% in March to 228,000 (the lowest since March 1971). The supply of new homes in relation to sales dropped to 6.7 months from 8.6 months in the prior month.

BOTTOM LINE: We believe that the jump in new home sales in March reflects a rebound from weather-depressed levels in January and February. New home sales may be affected by the pending expiration of the homebuyers’ tax credit at the end of April (the current credit is available for binding sales contracts signed before April 30 and completed before June 30—new home sales are based on contract signings), although the tax credit does not appear to have materially impacted sales last Fall. Nonetheless, it may take until later in the second quarter to get a clearer picture on underlying conditions in the new home sales market.

Source RDQ


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