Spring home shoppers apparently remained in hibernation through March, as new home sales dropped 14.5%, compared to February, to reach their lowest level in eight months, according to figures released by the U.S. Census Bureau and the U.S. Department of Housing and Urban Development.
Sales of new single-family houses were at a seasonally adjusted annual rate of about 384,000 – far below the revised February rate of about 449,000 and 13.3% below the March 2013 estimate of 443,000.
The report no doubt comes as a surprise to those economists who had forecast new home sales to increase, due to the arrival of the spring home shopping season. What's more, new home sales had been on a roll up until January, as a result of low inventory and pent up demand.
While some have said that unusually harsh winter weather contributed to slower new home sales during the first quarter, Kevin Kelly, chairman of the National Association of Home Builders (NAHB), says tighter credit is perhaps more to blame:
‘We keep hearing from our members that tight credit conditions are preventing many first-time buyers and younger families from being able to buy a home,’ Kelly says in a statement. ‘Congress must outline a clear policy on housing finance so that qualified buyers can get home loans. Otherwise, this continued uncertainty could threaten the housing recovery and overall economy.’
‘Overly stringent underwriting standards for mortgages have had a detrimental effect on modest-priced markets and have hit first-time home buyers particularly hard," adds David Crowe, chief economist for NAHB. ‘As a result, most of the sales are coming from a smaller pool of buyers who have a more established credit history, are more likely to finance with higher cash downpayments and are purchasing higher-priced homes.’
Regionally, sales in March fell 21.5 percent in the Midwest, 14.4 percent in the South and 16.7 percent in the West. The Northeast was the exception to the rule, with a 12.5 percent increase.
The median sales price of new homes sold in March was $290,000. The average sales price was $334,200.
The seasonally adjusted estimate of new homes for sale at the end of March was 193,000 – a six-month supply at the current sales rate.
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