WASHINGTON (AP) — Sales of new U.S. homes increased 4.5% in March, the third straight monthly gain as the housing market appears to be cautiously recovering from a mortgage rate spike last year that caused homebuying to slump.
The Commerce Department said Tuesday that new homes sold at a seasonally adjusted annual rate of 692,000 in March, up from 662,000 in February. For the first three months of 2019, new-home sales were 1.7% higher than the same period a year ago.
March’s sales pace was the strongest since November 2017, a sign that the market for newer properties is building some momentum. New-home sales began to rebound after the average 30-year mortgage rate fell from its recent peak of nearly 5% in November 2018.
Yet the housing market has been uneven in recent months, a sign that years of price gains have hurt affordability and that lower mortgage rates can only remove a degree of the pressure from higher costs. Sales of existing homes — which make up the bulk of purchases — plunged 4.9% in March, the National Association of Realtors said Monday.
The median sales price of a new home in February tumbled 9.7% to 02,700.
Price pressures are creating a search for more affordable options.
In March, 16% of new-homes were sold for less than 00,000. This was marked increase from 2018, when just 12% of new homes sold for less than 00,000. Still, monthly sales figures can be volatile and the industry’s preference for more profitable homes at higher prices could cause that share to dip in the coming months.