New Home Sales: Surprise Bounce

Bottom Line:   New home sales rose sharply in March, countering expectations for a further decline. There were negative revisions to February data, but those were nearly offset by positive revisions to January data. Just as we have seen in reports of existing home sales and housing starts, the market remains very tight with limited supply. Average sale prices inched higher for the second month and appear to be bottoming after a 5-7% correction. Overall, new home sales bottomed in 3rd Quarter of 2022 and have been edging slightly higher since then. Residential investment will likely remain a drag on growth in the 1st Half of 2023, but its negative impact should be more muted. And it could be a slight positive by the 2nd Half.