NEW Home Sales and Prices for March 2022

When coronavirus first impacted the United States in March 2020, sales of NEW homes immediately stalled but quickly recovered as the Federal Reserve dropped the federal funds rate to between 0 – 0.25%. This caused other short-term and long-term rates to drop. Mortgage rates continued at record low rates in late 2020 and into 2021. 

Generational low mortgage rates may have brought demand forward and temporarily increased sales, thus when mortgage rates increased, it may give the impression that NEW home sales have stalled.  It appears sales have returned to levels that prevailed before the COVID-19 outbreak in January of 2020.  It is noted that when 30-year mortgage rates were near 5% (4.94%) in November 2018, sales materially slowed, and months of inventory spiked for a couple of months.  5.00% mortgage rates may be a price point for NEW home sales that are sensitive to and mortgage rates that exceeded 5.00% in mid-April 2022. 

New Home Sales and Prices

Home Sales and Prices for the Month Ending: March 2022

In April/May of 2021, new home sales materially decreased although interest rates were relatively stable at 3.25%. On January 20, 2020, the CDC confirms the first U.S. laboratory-confirmed case of COVID-19 in the U.S. from samples taken on January 18 in Washington State. On March 15, 2020, U.S. states begin to shut down to prevent the spread of COVID-19, and Mortgage rates went below 3.00% between Oct-Feb 2021. While this may have brought forward demand and thus decreased sales in later months, sales have not returned to the elevated levels of 2020.  However, sales may have returned to a trend that prevailed prior to COVID-19.

New Homes Supply For Sale and New Home Starts

When SARS-CoV-2 first appeared in the US, new home sales initially dropped and then sharply rebounded as mortgage rates hit multi-generation lows of 3.00%. With a sudden surge in sales, months of inventory dropped. When mortgage rates rose in early 2021, sales pulled back and months of inventory returned to levels that prevailed prior to COVID-19. It is important to note the large increase in “Months of Inventory” that occurred in November of 2018. That is when Mortgage rates hit 5.00% and sales slumped. On April 14, 2022, rates went above 5.00%.

Bill Knudson, Research Analyst Landco ARESC