Sales of new single-family homes jump 7.4 percent to a seasonally adjusted annual rate of 724,000, well above the consensus of 682,000 in the Econoday survey of forecasters. Sales are up 6.0 percent from 683,000 in March 2024. The total likely got a boost from a dip in mortgage rates which allowed homebuyers to exercise some pent-up demand. Sales are uneven across regions. Sales are down 1.4 percent in the West and off 22.2 percent in the Northeast both regions with typically higher home prices. Sales gain 13.6 percent in the South and up 3.0 percent in the in the Midwest. Sales in the South probably follow on destruction of housing stock in October and November 2024. Midwest homes are generally in the more affordable price ranges and benefit from a dip in rates.

The Freddie Mac weekly average rate for a 30-year fixed rate mortgage had a recent peak of 7.04 percent in the January 16 week and has since fallen to a low of 6.63 percent in the March 6 week. Homebuyers who could qualify for a mortgage and ready to buy a home took advantage of the dip in rates. Mortgage rates remained relatively steady until the April 17 week when they jumped 21 basis points to 6.83 percent. The higher level will choke off buying again.

The price of a new single-family home in March is down 1.9 percent to a median $403,600. This suggests that new sales are generally of smaller units in lower price ranges. The supply of homes available for sales is down to 8.3 months' worth in March. In addition to buyers reducing some inventory, homebuilders are also cutting back on starting homes in the face of less demand.

The share of total sales going to homes not yet started is 11 percent in March, well below hot housing market in late 2020 and early 2021 when units not started saw a peak at 35% in November 2020. Units under construction have a 36 percent share of sales. The majority of buyers are opting for finished units.

Home sales are seen improving again to a 682,000 annual rate in March after rising to 676K in February.

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.