Sales of new homes throughout the United States showed unexpected strength in March, growing 4.5 percent to a seasonally adjusted annual rate of 692,000 units. This was their highest level since November 2017, said the U.S. Department of Commerce.

Analysts polled by International Business Times had forecast new home sales in March to fall 1.5 percent to 646,000 units, from a 4.9 percent month-on-month growth recorded in February.  New home sales account for some 11.7 percent of total housing market sales.

The number of homes sold was also 3 percent better than sales in March 2018. The Commerce Department said new home sales in February came in at 662,000 units. Because new home sales are drawn from permits, their number tends to be volatile on a month-to-month basis.

Analysts had been widely expecting a drop in new home sales in March similar to the one that hit existing home units. Existing home sales fell 4.9 percent to a seasonally adjusted annual rate of 5.21 million units last month.

It appears, however, that lower mortgage rates and lower home prices for new homes further stoked demand leading to better-than-expected sales. The Commerce Department said the median sales price of a new home in March was $302,700, down 9.7 percent from a year ago and the lowest level since February 2017.

New home sales in the South accounted for the bulk of transactions in March. They rose 3.6 percent in March to their highest level since July 2007.

Sales in the Midwest soared 17.6 percent, while those in the West improved by 6.7 percent. Sales in the Northeast, however, plummeted 22.2 percent.

There were 344,000 new homes on the market in March, a 0.3 percent decrease from February. At March’s sales pace, it might take at least six months to clear the supply of houses on the market, compared to 6.3 months in February.

Some 62 percent of the houses sold last month were either under construction or have yet to be built.

A realtor and bank-owned sign is displayed near a house for sale in Phoenix Millions of homeowners, particularly in low-income areas, remain trapped underwater. Above are signs posted outside a house for sale in Phoenix. Photo: Reuters

Analysts noted that new home sales haven’t been as severely impacted by the supply problems bedeviling the market for previously owned homes.

The fundamentals for housing are improving despite supply and labor problems. The 30-year fixed mortgage rate has fallen by about 80 basis points since November 2018, according to data from mortgage finance agency Freddie Mac.