New-home sales were down in March, according to the latest data from the U.S. Census Bureau and the Department of Housing and Urban Development, but that number should be taken with a grain of salt. While reporting a decline of 7.1% to an annual rate of 328,000, the estimate came with a caveat: plus or minus 20.7%, meaning the number is far from statistically significant.
Fortunately, revisions to the three previous months brought good news: February’s estimate was revised upward to the tune of an additional 40,000 sales, bringing that month’s annual rate to 353,000. Estimates for December and January were also moved upward for a combined improvement of 16,000 units.
Inventory of for-sale new homes fell to a new record low during the month to 144,000 homes (data start in 1963), and completed homes for sale also fell to a record low at 48,000. At March’s sales pace, the industry holds a 5.3-month supply.
"I think what' happening now is the consumer is a little confused," says Stan Ross, chairman of the board at the USC LUSK Center for Real Estate, pointing to today's downward pointing consumer confidence reports. Expectations for a big boost in spring sales were "prematurely high," he says. And while he does think sales will move up in coming months, "I don't think it's going to be at the record-high levels people were expecting." While consumers don't want to miss out on low interest rates and prices, Ross doesn't expect buyers to make the jump in large numbers until there's more certainty in the marketplace. "As they see foreclosures being absorbed and unemployment coming down, they'll start coming back into the marketplace, but it's not going to be as good a season as anticipated."
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Claire Easley is a senior editor at Builder.
Learn more about markets featured in this article: Greenville, SC.