Sales of new single-family homes rose 8.8 percent in March to 693,000 after an upward revision to 637,000 in February. The sales level in March is above the consensus of 670,000 in the Econoday survey of forecasters. Demand for new single-family homes remains active despite higher prices and elevated mortgage rates due to limited existing single-family homes on the market. However, the same prices and rates are restraining sales as some potential homebuyers are priced out of the market or have delayed purchasing waiting for mortgage rates to decline.

The median price of a new single-family home rose 6.0 percent in March to $430,700 from $406,500 in February but was down 1.9 percent from $438,900 a year ago. This contrast is due to competition for homes in the lower price ranges, which is raising prices in the near term, but is comparatively below last year when sales were more in the higher price ranges. The supply of new homes available for sale is at 8.3 months, down from 8.8 months in February but slightly more than 8.1 months in March 2023.

Homebuyers in the March market were using mortgages mostly taken out in February. The Freddie Mac average rate for a 30-year fixed rate mortgage was 6.64 percent in January, rose to 6.81 percent in February and was little changed at 6.82 percent in March. At these high rates, homebuyers are less likely to act quickly and take out contracts before the unit is started. The share of homes sold for units not yet started was 12 percent in March, down from 13 percent in February and 15 percent in March 2023. The share of homes under construction sold was 41 percent, down from 43 percent in February and 44 percent in March 2023. The share of homes sold that were complete was 47 percent in March after 43 percent in February and 41 percent a year ago.

Despite elevated mortgage rates, sales continued at a solid pace of 662,000 in February and 664,000 in January. March's consensus is a steady showing at 670,000.

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.