March New Home Sales Feel Brunt of Coronavirus

(Published Apr. 24, 2020)

The expected hit to new home sales from the coronavirus pandemic fully manifested itself in March, falling by more than 15 percent from February to its lowest level in six years, HUD and the Census Bureau reported yesterday.

The report said sales of new single‐family houses in March fell to a seasonally adjusted annual rate of 627,000, 15.4 percent lower than the revised February rate of 741,000 and 9.5 percent lower than a year ago (693,000).

Regionally, sales fell across the board, most notably in the West, where March sales plunged by 38.5 percent to 139,000 units, seasonally annually adjusted, from 226,000 units in February. From a year ago, sales in the West fell by nearly 31 percent.

Sales didn’t fare any better in the Northeast, falling by 41.5 percent to 24,000 units, seasonally annually adjusted, in March from 41,000 units in February and by 4 percent from a year ago.

However, in largest region, the South, sales fell by just 0.8 percent in March to 385,000 units, seasonally annually adjusted, from 388,000 units in February and improved by 1.3 percent from a year ago. In the Midwest, sales fell by 8.1 percent in March to 79,000 units from 86,000 units in February and fell by 9.2 percent from a year ago.

The report said the median sales price of new houses sold in March rose to $321,400. The average sales price rose to $375,300. The seasonally adjusted estimate of new houses for sale at the end of March rose to 333,000, representing a supply of 6.4 months at the current sales rate.

Mark Vitner, Senior Economist with Wells Fargo Securities, Charlotte, N.C., said March new home sales fell largely in line with expectations.

“Even with the March drop and February revision, sales through March are running 6.7% ahead of their year-ago pace,” Vitner said. “Mild weather and strong job growth got 2020 off to a strong start…“The decline suggests that sales will not crater like airline travel and restaurant sales did. Sales should also bounce back more quickly this summer.”