Latest Housing Data Mixed; High Rates Cut into Demand

WHITE PLAINS—One day before the release of local and national home sales statistics by the Hudson Gateway Association of Realtors and the National Association of Realtors respectively, the latest housing data indicates a healthy new home sales market and a struggling existing home sales sector.

For the existing home sales market, high rates and low inventory continue to dampen sales activity. New home sales nationwide continued to grow even despite high lending rates, although sales in the Northeast fell more than 30% last month as compared to a year earlier.

The latest new home sales data released by the U.S. Census Bureau and HUD for the month of March showed that a slight decline in mortgage rates fueled a more than 7% nationwide increase in new single-family home sales despite the uncertain economic climate.

The National Association of Home Builders reported that sales of newly built, single-family homes in March increased 7.4% to a 724,000 seasonally adjusted annual rate from a revised January number. The pace of new home sales in March was up 6.0% compared to a year earlier.

“The March new home sales data shows that demand continues to be present in the market, provided affordability conditions permit a purchase,” said Buddy Hughes, chairman of the National Association of Home Builders and a home builder and developer from Lexington, NC “An increase in economic certainty would be a big boost to future sales conditions.”

“Lower mortgage interest rates helped boost the pace of new home sales in March,” added NAHB Chief Economist Robert Dietz. “In February, the average 30-year fixed rate mortgage was 6.84%, while in March it fell to 6.65%.”.

New single-family home inventory in March continued to rise to a level of 503,000, up 7.9% compared to a year earlier. This represents an 8.3 months’ supply at the current building pace. This level of supply continues to be reasonable given that the resale, single-family months’ supply remains lean at just 3.4, NAHB officials stated. The count of completed, ready-to-occupy homes available for sale increased to 119,000, up 34% from a year ago.

The median new home sale price in March was $403,600, down 7.5% from a year ago. Sales were particularly strong at lower price levels. Compared to March 2024, new home sales were 33% higher for homes priced below $300,000 and 28% higher for new homes priced between $300,000 and $400,000.

Regionally, on a year-to-date basis, new home sales were up 12.9% in the South, but were down 32% in the Northeast, 18.3% in the Midwest and 6% in the West.

National Association of Realtors Chief Economist Lawrence Yun in a statement in reaction to the new housing figures, said, “Despite the stubborn elevated mortgage rates, new home sales rose 7% in March from a month ago and are up 6% from a year ago. A wide inventory availability—at an 8-month supply—is helping newly constructed home sales to move forward. The homebuilders’ focus on smaller-sized homes is also attracting buyers. The median price of newly constructed homes was $403,600, well below the $435,000 price from three years ago when builders were constructing larger-sized homes. The latest monthly gain is on top of annual gains of the past two years for homebuilders.”

However, Yun noted the contrast between the new home and existing sales markets, noting that the sales in the existing home sector have struggled the past two years due to low inventory levels. “But the passage of time should bring about more inventory as life-changing events force some homeowners to give up their locked-in low mortgage rates. Mortgage applications to purchase homes are up 4.3% year-to-date, even though an application does not mean an approval or decision to enter the market. Aside from inventory growth, lower mortgage rates will be needed to get homeowners to move,” he noted.

Today, the Mortgage Bankers Association reported that thanks to mortgage rates once again approaching 7%, mortgage applications fell 12.7% from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ended April 18.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($806,500 or less) increased to 6.90% from 6.81%, with points increasing to 0.66 from 0.62 (including the origination fee) for 80% loan-to-value ratio (LTV) loans.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $806,500) increased to 6.90% from 6.84%, with points increasing to 0.45 from 0.30 (including the origination fee) for 80% LTV loans.

“Overall mortgage application activity declined last week, as rates increased to their highest level in two months. The 30-year fixed rate rose for the second straight week to 6.9%, an almost 30-basis-point increase over two weeks,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “These higher rates drove a 20% drop in refinance applications, especially for higher balance loans, with the average loan size falling substantially. The refinance share of applications at 37.3% was the lowest since January. Similar to the previous week, economic uncertainty and rate volatility impacted prospective homebuyers as we saw a 7% decline in purchase applications. Both conventional and government purchase activity fell relative to the week before, but the overall level of purchase applications was still 6% higher than a year ago.”