New home sales rebound from record low

New home sales totaled a seasonally adjusted annual rate of 300,000, representing an 11.1% rise from an upwardly revised 270,000 in February, suggesting that calmer weather may have provided a mild tailwind for home builders, as sales rebounded from their lowest level since records began back in 1963.



Based on current sales, the supply of homes for sales fell from 8.2 months in February to 7.3 months in March.

The actual number of new homes for sale slipped by 2,000 to 183,000, the lowest number since August 1967 when a record low of 181,000 homes were available, according to government data.



Of course, the U.S. population is much greater than it was over 40 years ago, and the lack of available supply may lend support to the market when sales eventually rebound.

Builders are not where they would like to be but they have been able to reduce the supply of homes on the market that are based on current sales from a peak of over 12 months in early 2009 to a more sustainable range.

Still, the lack of actual supply, which might normally be a plus for the market, is being offset by a number of factors at the current time.

Builders continue to compete with distressed sales and a shadow inventory of late model homes that are being held in foreclosure.

Traffic is a key driver for housing starts, and visitors at model homes are down sharply from the levels seen when the market was much stronger.

Many who have been forced from their houses are finding shelter in rentals and have little desire, or the financial resources, to purchase another home at this time. And the general lack of confidence potential buyers have in the housing market is also a headwind to sales.

The rebound in March shouldn’t be dismissed as it suggests the new home market is not headed to new lows, but sales continue to meander along the bottom without any concrete signs of a new burst in activity (see Home builder sentiment languishes).