Sales of newly built single family homes rose 11.1% to a seasonally adjusted annual rate of 300,000 units in March according to the US Commerce Department.
The gain partially offsets a large decline that occurred in new-home sales in February.
“The fact that new-home sales have regained some of the ground they lost earlier this year is a promising sign at the start of the spring home buying season,” said Bob Nielsen, chairman of the National Association of Home Builders (NAHB) and a home builder from Reno, Nev. “While potential buyers continue to be extremely cautious, they are starting to take a look around and evaluate their very good options with regard to attractively priced new homes.”
According NAHB’s Chief Economist, David Crow, the average sales pace for the fist quarter of 2011 held at about the same level seen for the last half of 2010. A limiting factor is the extremely thin inventory of new homes for sale, which is now at its second-lowest level in history.
“Builders continue to confront major challenges in obtaining financing to build new homes, and the shortage of new product makes it that much tougher for them to compete with existing homes on the market. At the same time, tighter lending conditions are making it more difficult for qualified buyers to obtain a mortgage.”
New-home sales regained ground in three out of four regions this March. The Northeast posted a 66.7 percent gain from a very low sales pace in the previous month, while the Midwest posted a 12.9 percent increase and the West posted a 25.9 percent gain. Meanwhile, sales activity remained virtually unchanged in the South, with a 0.6 percent decline.
The inventory of new homes for sale fell to 183,000 units in March, which is the second-lowest level on record. This represents a 7.3-month supply at the current sales pace.