Sales of newly built single-family homes in the U.S. saw a stronger-than-anticipated boost in March, as homebuyers moved quickly to lock in lower mortgage rates before they began creeping back up. According to data released by the U.S. Census Bureau, new home sales rose 7.4% last month to a seasonally adjusted annual rate of 724,000 units—the highest level recorded since September 2024.
February's sales were revised slightly downward to 674,000 units, but the March rebound still came in well ahead of economists' expectations. Analysts surveyed by Reuters had forecast sales would reach 680,000 units. On a year-over-year basis, new home sales were up 6.0%.
This unexpected surge was largely fueled by a brief dip in mortgage rates. Freddie Mac reported that the average rate for a 30-year fixed mortgage fell to 6.65% in March, down from 6.76% at the end of February. That window of lower rates spurred many prospective buyers into action.
However, the relief was short-lived. Mortgage rates have since climbed again, reaching 6.83%—a two-month high—as financial markets responded to uncertainty surrounding President Donald Trump's shifting tariff policies. Concerns over slowing economic growth and rising inflation have prompted some economists to question whether the Federal Reserve will follow through with anticipated rate cuts in the coming months.
Federal Reserve Chair Jerome Powell has signaled a cautious approach, warning that ongoing trade tensions could steer inflation and employment away from the Fed's targets. Meanwhile, political pressure on the Fed—including public criticism from President Trump—has raised alarm over the central bank's independence, causing some investors to pull back from U.S. assets like Treasury bonds. Since mortgage rates typically follow the 10-year Treasury yield, those developments have translated into higher borrowing costs for homebuyers.
Compounding concerns for the housing market are rising construction costs. The National Association of Homebuilders recently estimated that new tariffs—including a 25% tax on imported steel and aluminum and significantly higher duties on Chinese goods—have increased the cost to build a home by approximately $10,900. As a result, the organization expects a slowdown in sales over the next six months.
Regionally, new home sales in March rose in the South and Midwest but fell in the Northeast and West. The median price of a new home dropped 7.5% year-over-year to $403,600, suggesting a shift toward more affordable properties. Most sales were concentrated in the under-$500,000 range.
The inventory of new homes on the market edged up 0.6% to 503,000 units, marking the highest level since November 2007. At the current sales pace, it would take 8.3 months to exhaust available supply—down from 8.9 months in February but still indicative of a market with more homes than buyers.
While the jump in sales offers a hopeful sign for builders, ongoing economic volatility, trade policy uncertainty, and elevated mortgage rates remain critical headwinds to watch in the months ahead.
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