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April 25, 2017 10:15 AM, EDT

New-Home Sales Unexpectedly Rise to Highest Since July

Daniel Acker/Bloomberg News

Purchases of new U.S. homes unexpectedly increased in March to an eight-month high, indicating housing demand remained strong at the start of the spring buying season, Commerce Department data showed April 25.

Key Points

• Single-family home sales increased 5.8% to a 621,000 annualized pace (median forecast called for a 584,000 rate).

• The median sale price of a new house rose 1.2% from March 2016 to $315,100.

• Supply of homes shrank to 5.2 months from 5.4 months; there were 268,000 new houses on the market at the end of March.

RELATED: Home prices in 20 US cities accelerate for a fifth month

Big Picture

Steady job growth and improving wages are continuing to drive demand, building on last year’s new-home sales, which were the strongest since 2007.

While mortgage costs remain above pre-election levels, they’re becoming less of a curb on the market, with the average 30-year fixed rate falling in the week of April 17 to the lowest since November. Still, lean inventories and rising prices may restrain any gains.

Other Details

• Rise in demand was led by a 16.7% gain in the West, which had the fastest sales pace since 2007. The South and Northeast also saw gains, but purchases slowed in the Midwest.

• The February reading was revised to a 587,000 pace from a previously estimated 592,000.

• Commerce Department said there was 90% confidence that the change in sales in March ranged from a 9.7% drop to a 21.3% increase, underscoring the volatility of the data.

• New-home sales account for about 10% of the residential market and are tabulated when contracts are signed. Existing-home sales, which rose 4.4% last month, are based on contract closings.