Today’s Thoughts: How COVID-19 Is Affecting the New-Home Market

The new-home market was showing a strong first quarter in 2020 until the pandemic hit. Sales of newly built single-family homes decreased 15.4% in March to a seasonally adjusted annual rate of 627,000 units, according to data released Thursday from the U.S. Census Bureau and Department of Housing and Urban Development. Sales were 9.5% lower than a year ago, and markets hardest hit by COVID-19 saw the largest slowdown in sales last month.

“Despite the sharp decline in new-home sales [last] month, the first quarter of 2020 was actually 6.7% higher than the same period last year, reflecting a strong pace prior to the virus outbreak,” says Dean Mon, chairman of the National Association of Home Builders. “While we expect to see some further impacts to the industry, we remain confident that housing will be a sector that will help lead the economic recovery.”

Inventory of new homes increased to a 6.4-month supply in March. There were 333,000 new single-family homes for sale last month, which is 1.2% fewer than a year ago. The NAHB reports that of that total, 76,000 are completed and ready to occupy.

The median sales price for a new home in March was $321,400, up from $310,600 a year ago.”Buyers still in the market for a home might take a fresh look at new homes in the months ahead, especially if new-home prices soften,”® Chief Economist Danielle Hale said in a statement.

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