New home sales in the South surged in March, defying economists’ expectations for a decline and suggesting a possibly resilient housing market despite broader economic uncertainties, according to the latest data from the Census Bureau.
By the numbers:
- Southern Surge: Sales in the South, a critical market for the U.S. housing sector, reached a seasonally adjusted annual rate of 391,000 homes, up 7.7% from February and are now at the highest level since December 2023.
- National spike: Across the nation, new home sales increased by 8.8% in March, starkly contrasting with the anticipated 0.9% decrease and the biggest monthly jump since December 2022.
- Inventory levels: Homes available for sale rose to 477,000 in March, the highest since February 2008, signaling a significant stock of housing. However, this critical indicator of inventory level, months supply, dipped to 8.3 months from 8.8 months in February.
Looks can be deceiving: Bill McBride, on his Calculated Risk Blog, contextualizes the current supply, “The all-time record high was 12.2 months of supply in January 2009. The all-time record low was 3.3 months in August 2020. This is well above the top of the normal range (about 4 to 6 months of supply is normal).”
Still behind: While March’s figures show an uptick in the South, the year-to-date sales are still down 6.6% despite the year-over-year number indicating a 4% rise, reflecting ongoing volatility in the housing market. The increase in overall inventory levels alongside rising sales suggests that while more buyers are entering the market, there’s still ample supply of new homes, which could put some downward pressure on home prices.
The big picture: The robust sales in March could be a sign of enduring demand in the housing market, possibly driven by buyers rushing to lock in rates before any further increases. However, the elevated supply level suggests that the market still has a demand problem.