Let me get this straight: Mortgage and interest rates are on the rise. Household finances are also being pinched by record gasoline prices. Yet somehow, Americans have all of a sudden decided to go out and buy a whole slew of new homes?
Biz Buzz: A daily update on economic and business news
Archive: A comprehensive listing of Biz Buzz columns
That's what a new government report released this morning would seem to suggest. But dig a little deeper, and you'll see what's really going on.
According to the Commerce Department, new-home sales in March shot up an unexpected 13.8 percent, after plummeting nearly 11 percent in the prior month. As a result, the inventory of new unsold homes in the market fell from 6.3 months' worth of housing stock to 5.5 months.
The news comes only a day after the National Association of Realtors reported a slight increase in existing-home sales last month.
The March new-home sales figures came as a bit of a shocker to economists, who were forecasting single-digit growth at best. But the news wasn't all good.
In February, for instance, the government reported that the median price of a new home sold was just under $240,000. At that price, homebuilders found that demand was diminishing. In fact, new-home sales plunged by 10.9 percent that month.
So in March, homebuilders started slashing prices. The median sales price of a newly constructed property sold in March fell 7 percent down to $224,200. And since peaking at $243,900 in October, median sales prices on new houses have tumbled 8 percent.
What does this mean? While demand for new homes may be up, this is clearly turning into a buyer's market.
So if you're in the market to purchase a new home, wait. If you show some patience, chances are home sellers will be putting their properties in the discount bin.
