U.S. New Home Sales Rebound Much More Than Expected In March

(RTTNews) - After reporting a sharp pullback in U.S. new home sales in the previous month, the Commerce Department released a report on Friday showing a substantial rebound in new home sales in the month of March.

The report showed new home sales skyrocketed by 20.7 percent to an annual rate of 1.021 million in March after plunging by 16.2 percent to a revised rate of 846,000 in February.

Economists had expected new home sales to spike by 14.3 percent to a rate of 886,000 from the 775,000 originally reported for the previous month.

With the rebound, new home sales soared from the eight-month low set in February to their highest level since August of 2006.

"Despite strong demand, we don't expect the March pace of sales to be sustained as high home prices take a toll on affordability," said Nancy Vanden Houten, Lead U.S. Economist at Oxford Economics.

She added, "We look for new home sales to decline to a [seasonally adjusted annual rate] of about 825,000 by the fourth quarter."

New home sales in the South helped lead the way higher in March, surging up by 40.2 percent to an annual rate of 694,000.

Home sales in the Midwest and North also jumped by 30.7 percent and 20.0 percent, respectively, while sales in the West tumbled by 30.0 percent.

The report also said the median sales price of new houses sold in March was $330,800, down 4.4 percent from $345,900 in February but up 0.8 percent from $328,200 a year ago.

The Commerce Department said the estimate of new houses for sale at the end of March was 307,000, representing 3.6 months of supply at the current sales rate.

The estimate of new houses for sale was unchanged from February, but the months of supply was down from 4.4 months due to the spike in the rate of sales. The months of supply was estimated at 6.5 months a year ago.

Meanwhile, the National Association of Realtors released a separate report on Thursday showing another steep drop in U.S. existing home sales in the month of March.

NAR said existing home sales tumbled by 3.7 percent to an annual rate of 6.01 million in March after plunging by 6.3 percent to a revised rate of 6.24 million in February.

Economists had expected existing home sales to dip by 0.5 percent to a rate of 6.19 million from the 6.22 million originally reported for the previous month.

Existing home sales fell to their lowest annual rate since August but were still up by 12.3 percent compared to the same month a year ago.