Decline in Mortgage Rates Helps to Increase New Home Sales in March
In March 2025, U.S. new home sales experienced a notable boost, rising 7.4% to a seasonally adjusted annual rate of 724,000 units—the highest level since September 2024. This surge was largely attributed to a modest decline in mortgage rates, which fell from 6.84% in February to 6.65% in March, making homeownership more accessible for many buyers. The increase in sales was especially pronounced in lower price brackets, with homes priced below $300,000 seeing a 33% uptick and those between $300,000 and $400,000 rising by 28% compared to the previous year. Additionally, the inventory of new single-family homes grew to 503,000 units, offering an 8.3-month supply, which is considered a healthy level given the tightness in the resale market.
National Association of Home Builders
Despite these positive developments, challenges persist in the housing market. The median new home sale price decreased by 7.5% year-over-year to $403,600, reflecting ongoing affordability concerns. Regionally, sales were uneven; while the South experienced a 12.9% increase, other areas saw declines—32% in the Northeast, 18.3% in the Midwest, and 6% in the West. These disparities highlight the complex dynamics at play, including regional economic conditions and varying levels of housing demand. Moreover, while the recent dip in mortgage rates provided temporary relief, rates remain elevated compared to historical norms, and broader economic uncertainties continue to influence buyer confidence and market stability.
