Sales of new single-family homes are up 9.6 percent to 683,000 in March after a downwardly revised 623,000 in February. The increase is above the consensus of 634,000 in an Econoday survey. The number of sales is the highest since 707,000 in March 2022, with the March 2023 level down 3.4 percent from then. Sales of new single-family construction rebounded in March due in part to the dip in mortgage rates and in part due to lack of supply for existing units. Builders have responded by offering new single-family units. The NAHB report for April noted that about one-third of homes sold are new construction versus the more normal 10 percent. Potential homebuyers are willing to consider traditionally more expensive new homes in a competitive market.

The supply of homes available for sale declined to 7.6 months' worth in March from 8.4 in February and is the lowest since 7.0 in March 2022. The price of a new single-family home is up 3.8 percent to $449,800 in March from $433,200 in February, and up 3.2 percent compared to $435,900 in March 2022. Homebuilders are no longer offering discounted prices to move units, although they may be offering other incentives.

The number of homes sold that are not yet started accounted for 25 percent of the 683,000 total in March, up from 17 percent of the total in February. Sales of homes under construction are 39 percent of the total, down from 43 percent in February. Sales of completed homes are 36 percent of the total, down from 40 percent in the prior month. Homebuyers are committing to a purchase in order to capture a more affordable interest rate and lock in monthly housing costs.

After a small uptick to a 640,000 annualized rate in February, new home sales in March are expected to slip back marginally to 634,000.

New home sales measure the number of newly constructed homes with a committed sale during the month. The level of new home sales indicates housing market trends and, in turn, economic momentum and consumer purchases of furniture and appliances.

This provides a gauge of not only the demand for housing, but the economic momentum. People have to be feeling pretty comfortable and confident in their own financial position to buy a house. Furthermore, this narrow piece of data has a powerful multiplier effect through the economy, and therefore across the markets and your investments. By tracking economic data such as new home sales, investors can gain specific investment ideas as well as broad guidance for managing a portfolio. Each time the construction of a new home begins, it translates to more construction jobs, and income which will be pumped back into the economy. Once the home is sold, it generates revenues for the home builder and the realtor. It brings a myriad of consumption opportunities for the buyer. Refrigerators, washers, dryers and furniture are just a few items new home buyers might purchase. The economic"ripple effect" can be substantial especially when you think a hundred thousand new households around the country are doing this every month. Since the economic backdrop is the most pervasive influence on financial markets, new home sales have a direct bearing on stocks, bonds and commodities. In a more specific sense, trends in the new home sales data carry valuable clues for the stocks of home builders, mortgage lenders and home furnishings companies.