Washington (AFP) - New home sales in the United States defied expectations to hit a one-year high in March, the Commerce Department said Tuesday, as a lack of existing homes bolstered demand in the market for new properties.
Sales of new single-family houses picked up 9.6 percent to an annual rate of 683,000 last month, seasonally adjusted, according to the department.
The figure was more than analysts forecast, while February's rate was revised down to 623,000.
"New home sales continue to outperform the level implied by mortgage demand by a wide margin, largely thanks to the relative lack of existing home supply," said Kieran Clancy, senior US economist at Pantheon Macroeconomics.
He added that the share of new homes in overall sales rose to 13 percent from about 10 percent over the summer, and is likely to increase slightly more in the months ahead.
But he stressed that the trend marks a "compositional shift" in demand, with total home sales still in line with what mortgage demand suggests.
This signals that sales could fall in the second quarter.
The supply of new homes for sale can last more than seven months, significantly higher than trends in the existing home market, he noted.
New home sales in March remain 3.4 percent below than the same period a year ago, the Commerce Department said.
The median sales price of new houses sold in March was $449,800, up from February.
"A tight supply of existing homes, builder incentives and resilient demand continue to support new home sales," said Nancy Vanden Houten, US economist at Oxford Economics.
"The road ahead isn't very bright as we think new home sales will weaken as the economy enters a recession and the labor market softens," she said.
Meanwhile, Rubeela Farooqi of High Frequency Economics noted that higher mortgage rates still weigh on affordability and "remain a constraint for buyers."
The property sector -- which is sensitive to interest rates -- has been reeling as the Federal Reserve rapidly raised the benchmark lending rate since early 2022 to tackle high inflation.
The new homes market is much smaller than that of existing homes in the country.
