Sales of new homes in the U.S. during March fell the most in more than 18 months following three straight monthly gains, according to the Commerce Department.
The 11.4% drop in new home sales from February is the biggest decline since July 2013, pulling the seasonally adjusted annual rate down to 481,000 new home sales. The drop was bigger than many analysts were expecting.
Despite the decline, new homes sales in March were up 19.4% from the same time a year earlier.
The department also revised upward February’s performance to an annual rate of 543,000, the best pace since February 2008.
The overall March decline was led by sales plummeting 33.3% in March from the month before in the Northeast along with declines of 15.8% in the South and 3.4% in the West. In contrast, sales in the Midwest increased 5.9%.
New home sales stand in sharp contrast to a report released earlier this week showing existing home sales in March hit the highest level in 18 months.
April Manufacturing Activity Down from March
A separate report offering the first look at the nation’s manufacturing sector this month shows slower growth, with production volumes and incoming new work both expanding at weaker rates than in the previous month.
According to the Flash U.S. Manufacturing Purchasing Managers Index from the financial information services provider Markit, the 54.2 level in April compares to 55.7 in March. Although still comfortably above the 50 “no-change value," the latest index reading indicates the least marked improvement in overall business conditions since January.
“Key to the slowdown was a weakening of export orders, in turn a symptom of the loss of competitiveness arising from the dollar’s strength," said Chris Williamson, chief economist at Markit. "However, while exporters are suffering, domestic demand looks to have remained robust, helping to sustain a reasonably strong production trend."
He said while growth has clearly slowed in 2015 compared to the impressive rate seen throughout much of last year, the goods-producing sector is by no means collapsing under the weight of the strong dollar, and fears of a sharp slowdown consequently look overplayed.
“The appreciation of the dollar is meanwhile also helping to keep inflation down, with firms reporting lower import prices helping push average prices paid for raw materials down sharply again,” Williamson said. “The past two months have seen the steepest back-to-back falls in manufacturers’ input prices since 2009.”