WASHINGTON (Reuters) - Sales of new U.S. single-family homes jumped to a one-year high in March, likely as a retreat in mortgage rates boosted demand.
New home sales surged 9.6% to a seasonally adjusted annual rate of 683,000 units last month, the highest level since March 2022, the Commerce Department said on Tuesday. February's sales pace was revised lower to 623,000 units from the previously reported 640,000.
New home sales are counted at the signing of a contract, making them a leading indicator of the housing market. They, however, can be volatile on a month-to-month basis.
Buyers have been taking advantage of any dip in mortgage rates to purchase homes. The average rate on the popular 30-year mortgage, which hit a peak of 7.03% in late 2022, was mostly lower in March, according to data from mortgage finance agency Freddie Mac (OTC:FMCC).
Economists polled by Reuters had forecast new home sales, which account for a small share of U.S. home sales, would fall to a rate of 630,000 units.
Sales soared 170.8% in the Northeast. They vaulted 29.8% in the West and gained 6.0% in the Midwest, but fell 5.4% in the South. Sales dropped 3.4% on a year-on-year basis in March.
The housing market has been hard hit by the Federal Reserve's fastest interest rate hiking campaign since the 1980s.
Residential investment has contracted for seven straight quarters, the longest such streak since the collapse of the housing bubble triggered by the 2007-2009 Great Recession.
But the worst of the housing market rout is likely over. Home builder sentiment continues to creep up, though it is still depressed. Single-family housing starts have risen for two consecutive months in March and permits for future construction increased to a five-month high.
Still, challenges remain. Banks have tightened lending standards, which could make it harder for homebuilders to access funding for new projects and for prospective home buyers to secure loans to purchase houses.
The median new house price in March was $449,800, a 3.2% rise from a year ago. There were 432,000 new homes on the market at the end of last month, down from 434,000 in February. At March's sales pace it would take 7.6 months to clear the supply of houses on the market, down from 8.4 months in February.