What’s bad news for home buyers and good news for home builders? A low inventory of previously owned homes is driving up new home sales and prices—that’s what.
The annual rate of new home sales jumped 1.5% in March to 417,000—the second highest monthly sales pace in three years. Year-over-year sales in March were up 18.5% according to data released Tuesday by the Commerce Department.
On Monday, the National Association of Realtors reported that only 1.93 million existing homes were for sale last month, the lowest home-count in March since 2000.
Builders are putting an increasing number of new homes into the market. Commerce Department data from Tuesday shows 153,000 newly built homes for sale.
Builders have taken advantage of heightened demand to raise prices. The median price of a new home in March was $247,000, up three percent from a year ago.
However, builders aren’t completely out of the woods. The National Association of Home Builders reported earlier this month that builder confidence fell for a third straight month, citing the increasing cost of land, labor, and construction materials.
The good news for builders is the plummeting inventory of existing homes on the market. According to Realtor.com, nine of the ten largest annual declines in existing home inventory as of March occurred in California markets, including Stockton, Sacramento, and Orange County.
Are builders cutting you out of a sales commission? Are your buyers asking to see new homes because of low inventory? What’s happening to you and in your market?