Good weather and a drop in unemployment aren't having the positive affect on home sales that builders would like. According to the latest figures from HUD and the U.S. Commerce Department, the sales of newly built, single-family homes declined 7.1 percent for the month of March.
This decline followed stronger than expected sales the month prior. February saw the fastest pace of new home sales since the end of the homebuyer tax credit.
"Some new-home sales that would have happened this March were likely pulled forward as a result of exceedingly good weather conditions across much of the country in February, when we recorded the quickest sales pace since the end of the home buyer tax credit," noted Barry Rutenberg, chairman of the National Association of Home Builders (NAHB) and a home builder from Gainesville, Fla. "The bottom line is that builders in many markets are reporting more interest among prospective buyers, with the main sticking points for sales right now being access to credit for builders and buyers, and problems with obtaining accurate appraisals."
Activity by region was mixed. Both the Northeast and South saw gains of a healthy 7.7 and 3.1 percent, while the Midwest and West posted sizable declines. The Midwest fell by 20 percent and the West by 27 percent. According to the NAHB, "The inventory of new homes for sale continued to shrink in March to a new record low of just 144,000 units, which is a 5.3-month supply at the current sales pace."
"The March decline is from a stronger-than-expected sales pace in February, and looking at the first quarter as a whole, sales are up 3.7 percent from the fourth quarter of 2011," noted NAHB Chief Economist David Crowe. "This is exactly the kind of modest, but substantive, growth that we are expecting to see in the year ahead along with gradual firming of the economy and job market."
Existing-home sales were also down in March. The National Association of Realtors reports that sales were down 2.6 percent.
In a positive spin on this news, however, this rate of existing-home sales is higher -- by 5.2 percent -- than year ago levels.
March's national median existing-home price was $163,800. This was a 2.5 percent rise from March of last year, welcome news to many sellers.
Distressed homes still make up a large portion of the market, accounting for 29 percent of all sales. This was a decline from 34 percent in February and 40 percent a year ago.
Investors are still pulling their weight in the market, purchasing 21 percent of all homes in March. Investors make up a large portion of cash transactions. All-cash sales were down slightly for March at 32 percent of all transactions.
Lawrence Yun, NAR chief economist, said the recovery is in the process of settling into a higher level of home sales. "The recovery is happening though not at a breakout pace, but we have seen nine consecutive months of year-over-year sales increases," he said. "Existing-home sales are moving up and down in a fairly narrow range that is well above the level of activity during the first half of last year. With job growth, low interest rates, bargain home prices and an improving economy, the pent-up demand is coming to market and we expect housing to be notably better this year."