WASHINGTON (ICIS)--US sales of new single-family homes fell sharply in March, the Commerce Department said on Wednesday, down by 14.5% from February and 13.3% lower than March last year in a downturn that home builders said is worrisome.
In its monthly report, the department said that sales of new one-family homes last month were at a seasonally adjusted annual pace of 384,000, down from the upwardly revised February figure of 449,000 (originally set at 440,000).
In addition to being 14.5% below the February pace, the department said that new home sales also were 13.3% below the March 2013 level of 443,000.
The downturn in sales was most pronounced in the Midwest, off by 21.5%, but there also were double-digit declines in the west, 16.7%, and the south, 14.4%.
Those declines more than offset a 12.5% advance in sales of new single-family homes reported for the northeast.
The March decline accelerated the revised 1.3% decline in February from January and stands as the lowest level of new home sales since July 2013, according to the National Association of Home Builders (NAHB).
NAHB chief economist David Crowe said that the March decline “was lower than expected”, but he added that “The trend downward for two months is the worrisome part.”
Crowe said that one factor inhibiting home sales is still strict lending policies among mortgage bankers.
“Even as mortgage rates soften a bit, potential home buyers with even small dings in their credit background are unable to qualify for a mortgage and so are out of the market,” he noted. Mortgage rates have eased slightly but are still around a full percentage point higher than a year ago.
In addition, he said, home prices continue to rise, pricing more and more would-be home buyers out of the market.
Crowe noted that home prices are 12.6% higher than a year ago to a median of $290,000, “the highest ever recorded”.
The North American spring and summer months should be a peak selling period for US housing, especially April through July. The decline in sales of new single-family homes in February and March suggest that the anticipated seasonal upturn for this month and the next several months could be in trouble.
However, Crowe said he expects sales to improve.
“Pent-up demand, relatively low mortgage rates and still good affordability support confidence that sales will improve as 2014 evolves,” he said.
The housing market is a key downstream consumer sector for the chemicals industry, driving demand for a wide variety of chemicals, resins and derivative products such as plastic pipe, insulation, paints and coatings, adhesives and synthetic fibres, among many others.
The American Chemistry Council (ACC) estimates that each new home built represents some $15,000 worth of chemicals and derivatives used in the structure or in production of component materials.
Paul Hodges studies key influences shaping the chemical industry in Chemicals and the Economy