New Home Sales Gain Some Momentum in March

New home sales rose 1.5% in March after a 7.6% decline in the prior month, according to newly released government data.

The Census Bureau reported Tuesday morning that sales of newly constructed homes increased to a 417,000 seasonally adjusted annual rate in March from a 411,000 rate in February.

Sales rose by roughly 20% in the Northeast and South, but fell 20% in the West and 12% in the Midwest.

The year started with new home sales breaking through the 400,000 seasonally adjusted annual rate in January for the first time since August 2009.

The sales rate has stayed above the 400,000 rate during the first quarter, the first time sales have been above the 400,000 mark for three straight months since the summer of 2008.

Overall, new home sales are up 18.5% from March 2012.

Despite the higher level of sales, the number of completed homes for sale rose slightly to 153,000 units in March. And the inventory remains tight at a 4.4-monthy supply at the current sales rate.

Lean inventories combined with gradually increasing demand should continue to support prices. Home prices are also being pushed higher by material and labor costs,” according to economists at Wells Fargo Securities.

The median sales price of a new home sold in March was $247,000, up 3% from a year ago.