How COVID-19 Is Affecting the New-Home Market
The new-home market was showing a strong first quarter in 2020 until the pandemic hit. Sales of newly built single-family homes decreased 15.4% in March to a seasonally adjusted annual rate of 627,000 units, according to data released Thursday from the U.S. Census Bureau and Department of Housing and Urban Development. Sales were 9.5% lower than a year ago, and markets hardest hit by COVID-19 saw the largest slowdown in sales last month.
“Despite the sharp decline in new-home sales [last] month, the first quarter of 2020 was actually 6.7% higher than the same period last year, reflecting a strong pace prior to the virus outbreak,” says Dean Mon, chairman of the National Association of Home Builders. “While we expect to see some further impacts to the industry, we remain confident that housing will be a sector that will help lead the economic recovery.”
Inventory of new homes increased to a 6.4-month supply in March. There were 333,000 new single-family homes for sale last month, which is 1.2% fewer than a year ago. The NAHB reports that of that total, 76,000 are completed and ready to occupy.
The median sales price for a new home in March was $321,400, up from $310,600 a year ago.
“Buyers still in the market for a home might take a fresh look at new homes in the months ahead, especially if new-home prices soften,” realtor.com® Chief Economist Danielle Hale said in a statement.
New-home sales dropped in all four regions of the U.S. last month. New-home sales saw the steepest drops in the Northeast, down 41.5%, followed by a 38.5% drop in the West, an 8.1% decrease in the Midwest, and a 0.8% decrease in the South.
“The drop in March sales reflects buyer concerns over the virus, and was primarily concentrated in the hardest-hit regions of the Northeast and West,” says NAHB Chief Economist Robert Dietz.
Existing-home sales saw a much smaller decline last month. The National Association of REALTORS® reported this week that sales of existing homes dropped 8.5% from February to March and were down just 0.8% over a year ago. Further, the median price for previously owned homes was up in March to $280,600—an 8% annual rise. Read more: Despite a Dip in March, Home Sales Push Ahead
Source: National Association of Home Builders and “New-Home Sales Plummeted in March. What Does This Mean for the Future?” realtor.com® (April 23, 2020)