New home sales took a hit in March 2022 as rising home prices and mortgage rates made homebuyers think twice before purchasing a new home, with sales reaching their lowest rate since November 2021.
New single-family home sales were down 8.6 percent from February’s rate of 835,000 to a seasonally adjusted annual rate of 763,000, which was also down 12.6 percent from March 2021, according to data released Tuesday from the U.S. Census Bureau and Department of Housing and Urban Development.
“A combination of factors has contributed to this decline including rising interest rates and rising prices, which have both hindered purchasing power for buyers, and a decline in single-family starts which has left inventory levels low,” RCLCO Principal Kelly Mangold said in a statement emailed to Inman.
“However, demographics remain a strong driver of housing demand and as the market adjusts to deliver product at price points and formats that align with this demand, sales are likely to be bolstered.”
The median sales price of new homes sold during March 2022 was $436,700, up from February’s revised estimate of $421,600. Meanwhile, the average sales price was $523,900, up from February’s revised estimate of $508,100.
The number of new homes for sale by the end of March was estimated at 407,000, up 3.8 percent from February’s revised estimate of 392,000, and up 33.4 percent year over year. That amount of available inventory represented a 6.4-months’ supply of homes at the current sales rate.
Last week, the National Association of Realtors (NAR) also reported a decline in existing-home sales, which the trade organization said was largely a result of similar factors as those affecting new home sales: rising mortgage rates and inflation. Mangold said that as construction labor continues to be difficult for homebuyers to find, new homes may become a more attractive alternative, eventually giving new home sales figures a slight boost.
“Due to the shortage of construction labor, buyers may be more hesitant to purchase a fixer-upper understanding that the cost and timeline of renovations may be extended, making a turn-key new construction home more appealing,” she said.