US new home sales unexpectedly rise in March

Sales of new US single-family homes unexpectedly rose in March, according to data released by the Commerce Department.

New home sales were up 4.5% from the previous month's revised rate to a seasonally-adjusted annual rate of 692,000. Analysts had pencilled in a 2.5% drop.

On the year, sales were 3% higher.

Meanwhile, the median price of a new home was $302,700, down from $315,200 in February.

The figures also showed that the seasonally-adjusted estimate of new houses for sale at the end of December was 344,000. This represents a supply of six months at the current sales rate.

Ian Shepherdson, chief economist at Pantheon Macroeconomics, said: "The net revision to the previous three months’ numbers was a hefty -42K, but the key point here is that sales are rising, in line with the trend in mortgage applications. Sales undershot last fall, partly due to severe weather, but after three straight increases they are now back in line. The 70 basis points drop in the average 30-year mortgage rate since November has lifted demand, while payroll growth remains strong and lending standards are little changed. The acute shortage of rental property - the vacancy rate is at a 34-year low - likely is helping too. The mortgage data suggest sales are unlikely to rise further in the short-term, but a new cycle high by the end of the second quarter is a reasonable bet.

"Median prices are now falling on a y/y basis, dropping 9.7% in the year to March, but these data are not mix-adjusted and are hugely unreliable in the short-term. Falling sales in high-tax areas, hit by the restrictions on SALT deductions, may have depressed median national prices. Inventory continues to rise in absolute terms, up 16% y/y, but the months’ supply has fallen as sales have rebounded, to 6.0 months in March from an alarming peak of 7.4 months in December."