April 25 (UPI) -- Federal data released Tuesday shows a surprise uptick in sales of new homes, though analysis suggests it may be a lack of existing homes on the market more than a reflection of renewed confidence in the U.S. economy.
The government reported sales of new, single-family homes were 683,000 in March, the last full month for which federal data is available. That represents a 9.6% increase from February, but 3.4% below year-ago levels.
James Knightly, the chief international economist at investment firm ING, said the figures are surprising given the recent downturn in mortgage applications.
"There isn't a huge amount of evidence suggesting a sudden surge in all-cash purchases, so we can only really rationalize it as a function of the lack of existing homes on the market for sale," he said. "This leaves potential buyers little option but to buy newly constructed homes."
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Those houses are more expensive. The average price for a new home sold in March was $449,800, compared with $435,900 for March 2022. There were 425,000 new homes on the market last month, meanwhile, compared with the 467,000 in August, when most school districts reopen after summer recess.
Separate data from the National Association of Realtors shows existing-home sales totaled 4.4 million in March, a 2.4% decline from February and 22% below the same period last year.
The Conference Board published survey results Tuesday, meanwhile, showing consumers are turning pessimistic amid concerns about a possible recession. Purchases from everything from a home to a new appliance declined amid lingering inflationary pressures.
ING added that the monthly payment on a $400,000, 30-year fixed-rate mortgage was $1,750 in January. A would-be home buyer looking for that payment on a monthly mortgage now would only get a loan of around $280,000, far below the average price of a new home.
