New-home sales tumbled 15.4% in March, the biggest drop in more than six years, as the COVID-19 pandemic kept buyers at home in the second half of the month and job losses mounted.
Builders sold 627,000 houses at an annualized and seasonally adjusted pace, the lowest level in 10 months, according to a government report released on Thursday that registers homes as sold when they go under contract. The median sale price rose 3.5% from a year ago to $321,400.
“We’ll probably see declines in April as well, after seeing more than 26 million job losses in the last several weeks,” said Robert Dietz, chief economist of the National Association of Home Builders. “We have low mortgage rates, which creates an attractive environment for buyers, but job insecurities will weigh on housing this quarter.”
The number of completed homes builders had for sale at the end of the month rose to 333,000, the highest in 10 months, from 324,000 in February.
The Federal Reserve in mid-March cut its benchmark rate to near zero as it rushed to support a faltering U.S. economy.
The Fed also began buying mortgage-backed securities to keep rates low and support housing by bolstering demand for the bonds that aggregate most U.S. home loans. Since then, the central bank has purchased more than $458 billion of agency bonds.
“I expect stabilization in the housing market in the third quarter, if not a quick rebound,” Dietz said. “We entered this particular recession underbuilt – not overbuilt, like it was a decade ago. The low mortgage rates and a shortage of supply will help to support the market.”
