U.S. new home sales rises above expectations in March

New home sales in the U.S. rose above expectations in the month of March. Sales rose 4 percent sequentially to 694k, as compared with consensus expectations of 630k. Part of the miss relative to the projection came from considerable upward revisions to the data for January and February, which were upwardly revised by a total of 71k. This implies that the housing sector activity in the March quarter was not as subdued as the data had suggested earlier, noted Barclays in a research report.

Most of the rise in home sales was seen in the West region, which recorded a rise of 28 percent. There was a modest rise in sales in South, while the Northeast and Midwest region saw declines.

The annual rate of appreciation of the median home price decelerated to 4.8 percent, and the inventory level remained stable. The months’ supply of new homes dropped to 5.2, greatly reflecting the sharp rise in sales.

“With regard to the effect on our Q1 tracking estimate, the March number, coupled with upward revisions to prior months’ data suggest more momentum in housing sector activity than we had previously penciled in. This implies higher brokers’ commissions in Q1 and led us to revise our residential investment tracker higher by four-tenths”, added Barclays.

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