Housing activity for new residential construction climbed in March, spurred by a greater supply of homes during a crucial spring period.
Sales of new homes rose 7.4% in March to a seasonally adjusted rate of 724,000 units, up from February’s rate of 676,000, according to the Census Bureau data released on Wednesday. The reading came in well above Bloomberg’s consensus forecast of 685,000.
Inventory also ticked up, with 503,000 homes for sale at the end of March, a 0.6% increase from the prior month, and still the highest since 2007, according to Bloomberg.
Still, many would-be buyers remain on the sidelines, deterred by high borrowing costs. Some measures show mortgage rates are approaching 7%, discouraging potential buyers.
Home loan rates tend to track the 10-year Treasury yield (^TNX), which has risen recently as investors retreat from it as a traditional safe haven. The Trump administration’s tariffs and threats to fire Federal Reserve Chair Jerome Powell are causing a reassessment of US assets and a blow to investor confidence in the central bank’s independence.
Adding to affordability challenges, house hunters are dealing with high home prices. The average sales price of a new home increased 1% to $497,700 in March.
And affordability pressures may worsen. During its post-earnings call Tuesday, PulteGroup (PHM) cautioned that new tariffs could drive up construction costs by about 1% in the back half of the year.
