US new-home sales rose in March by more than forecast as the median selling price slid to a more than four-year low and builders offered incentives.
New single-family home sales increased 7.4% from February to an annualized 682,000 pace, the fastest this year, according to government figures out Tuesday. The median estimate in a Bloomberg survey of economists was for a 652,000 pace.
The report also included a first read on February sales after figures were delayed by the federal government shutdown late last year.
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The pickup in sales suggests a gradual improvement in affordability since the middle of last year is slowly generating more demand. Homebuilders, who have been using a combination of incentives and price cuts, saw a pickup in prospective-buyer traffic in March after severe winter weather limited buyer demand early this year.
At the same time, mortgage rates have climbed from a recent low at the end of February, which could hamper homebuying activity in the coming months.
The government's report showed the median sales price of a new home decreased 6.2% in March from a year earlier to $387,400 — the lowest since July 2021. That decline likely reflected a pickup in contract signings for cheaper properties.
Some 22,000 homes priced from $300,000 up to $400,000 were sold, the most in that category in nearly five years. A larger number of houses priced less than that were also purchased.
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By region, sales in the South, the nation's biggest home-selling region, increased 11.1%, while purchases in the Northeast rebounded sharply. March contract signings fell in the Midwest and West.
Housing construction, which has subtracted from economic growth in each of the last five quarters, risks staying limited in the months ahead as builders focus on reducing inventory. The government's report showed that the number of new homes for sale in March fell from a year ago to 481,000.
Housing affordability is shaping up to be a key issue in the midterm elections in November, and both parties are proposing initiatives to improve the supply of housing and lower the costs for home buyers.
Separate data out last month showed pending sales of previously owned US homes
New-home sales are seen as a more timely measurement than purchases of existing homes, which are calculated when contracts close. However, the data are volatile on a monthly basis. The government report showed 90% confidence that the change in new-home sales ranged from a 8.1% decline to a 22.9% gain.
