This week’s release of the new home sales data for March was the latest in a batch of economic reports for the first quarter to have come weaker than had been anticipated. With respect to housing specifically, new home sales fell by 1.5% in March, which was the third consecutive monthly decline; existing homes sales were a little better in March, rising 5.1%, though this followed a 7.3% fall in February and an essentially flat reading in January. Housing starts, meanwhile, fell by 8.8% in March, which was the third decline in the last four months, and homebuilder sentiment (as gauged from the National Association of Homebuilders’ index) has stalled out at 58 for the last three months, after falling from 61 in January. In this week’s Economics Weekly, we take a current snapshot of the housing market, first looking at the supply-side drivers, followed by the demand-side drivers.
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Richard de Chazal, CFA is a London-based macroeconomist covering the U.S. economy and financial markets.