US New Home Sales Crater In March, Plunging 15.4%

Sales of new single-family houses collapsed in March as the lockdowns to contain the coronavirus outbreak took effect, dropping 15.4 percent compared to February, according to government data released Thursday.

Sales fell to a seasonally-adjusted annual rate of 627,000 last month, 9.5 percent below the March 2019 pace, with the deepest declines seen in the Northeast and West, where the rate dropped 41.5 percent and 38.5 percent, respectively.

With potential buyers staying home, the median sales price fell to $321,400 from $330,100, according to the report.

The data are subject to wild swings and large margins of error, and economists say part of the decline is due to mild weather early in the year, which brought some purchases forward.

But with 25 million people thrown out of work since mid-March, home sales are likely to suffer further, analysts say.

"The sharp deterioration in new home sales in March is indicative of a significant weakening in conditions in housing overall," said Rubeela Farooqi of High Frequency Economics.

"Housing will suffer the effects of a shutdown in activity and shelter-in-place orders as well as a sharp deterioration in labor market conditions, which will severely impact households' ability to purchase homes," she said in an analysis.

The housing market is a key driver of US economic activity and has seen a steady rate of growth in recent years, aided by low lending rates and a solid job market.

Interest rates have fallen even lower, but grim forecasts of the April unemployment rate surging into double digits and uncertainty over how soon the economy can return to normal will likely make buyers more cautious and put a damper on home sales.

Sales of existing homes fell 8.5 percent in March -- the biggest decline since 2015 -- according to data from the National Association of Realtors earlier in the week. Those figures include apartments and townhomes.