US new home sales see fastest pace in 8 months

Sales of new homes in the United States forged higher for the third straight month in March, hitting the fastest pace since July, the Commerce Department reported Tuesday.

The acceleration came as the volume of new houses for sale reached its highest level in nearly eight years, pointing to homebuilders' efforts to meet consistently strong demand in a tight market.

Housing analysts say the recovery has produced an exceptionally tight market, with supply failing to keep pace with a rebound in demand driven by steady job creation and rising wages.

American homebuyers snatched up newly built single-family homes in March at an annual rate of 621,000, seasonally adjusted, the highest in eight months and a sharp 5.8 percent above February's already-strong result, according to the report.

The unusually warm weather in January and February unpinned sales over the winter and analysts only expected a very modest increase last month.

But sales for March were a stunning 15.6 percent higher than the same month of 2016.

The Commerce Department estimated the stock of homes for sale at 268,000, the highest since July 2009, in the depths of the Great Recession.

However, the brisk sales pace meant supply was actually falling and was estimated at only 5.2 months, down 3.7 percent over February.

In a further sign of the tight market, the average home price rose 7.5 percent for the month to $315,100 but this was up only 1.2 percent from March 2016.

The rising prices was in line with the Case-Shiller home price index, released earlier Tuesday, showing the 20-city composite index rose 0.7 percent from February.

Analysts, however, cautioned that the Commerce Department's monthly sales numbers were volatile and often subject to large revisions.

Ian Shepherdson of Pantheon Macroeconomics said the increase of 34,000 home sales was "dwarfed" by a margin of error that was greater than 90,000.

"Moreover, the mortgage applications numbers, which tend to lead new home sales by about three months, suggest that we should expect lower sales over the next three months."