New home sales surged 20.7% in March to 1.02 million

U.S. and World Business News

A “for sale” sign stands along side a housing lot in Mount Prospect, Ill., Friday, April 2, 2021. U.S. home prices increased at the fastest pace in seven years in January as the pandemic has fueled demand for single-family houses even as the supply for such homes shrinks. (AP Photo/Nam Y. Huh)

WASHINGTON (AP) — Sales of new homes surged 20.7% in March to the highest level since 2006, rebounding from a sharp decline the previous month when severe winter storms wreaked havoc in many parts of the country.

Sales climbed to a seasonally adjusted annual rate of 1.02 million last month after a 16.2% tumble in February, the Commerce Department reported Friday. It was the fastest pace for new home sales since the housing boom of the mid-2000s when sales reached 1.04 million units in August 2006.

The median sales price of a new home sold in March was $330,800, up only 0.8% from the median sales price a year ago.

The big jump in new home sales stands in contrast to sales of existing homes, which fell for a second consecutive month in March, a drop that was blamed on a lack of supply which has pushed exiting home prices to new highs.

Housing has been one of the bright spots over the past year as the country was hit by a global pandemic which resulted in the loss of millions of jobs and prompted Congress to approve a series of relief measures totaling more than $5 trillion.

Analysts believe that the housing industry will have another good year in 2021, supported by ultra-low mortgage rates, but they expect the growth will moderate somewhat as home builders struggle with such problems as a surge in lumber prices, a shortage of construction workers and a lack of available building lots.

The inventory of unsold new homes stood at 307,000 in March, unchanged from February, but down 7% from a year ago.

“Inventories remain tight and while that should be a positive for home building activity, a lack of availability will likely remain a headwind for sales in the near term,” Rubeela Farooqi, chief U.S. economist at High Frequency Economics, said in a research note.

New home sales were up in every region of the country except the West where they fell by 30% in March. Sales rose 40.2% in the South while gaining 30.7% in the Midwest and 20% in the Northeast.

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