US new home sales crash in March, worse to follow

New home sales in the US staged their largest drop in six years last month with some economists expecting still worse in the April figures.

According to the Department of Commerce, the annualised rate of new home sales in the States fell 741,000 for February to 627,000 in March or by 15.4% month-on-month.

Economists had penciled in a slightly smaller drop to 650,000.

Against the year earlier level meanwhile, sales fell 9.5%.

The stock of homes available for sale jumped alongside, from the equivalent of 5.2 months worth of sales to 6.4.

Prices also weakened, with the average price falling from $387,200 in February to $375,300 for March, while median prices declined from $330,100 to $321,400.

A light at the end of the tunnel?

Commenting on the data, Ian Shepherdson at Pantheon Macroeconomics said: "sales ought to run at about 400K once the lockdown effect is over, assuming the levelling-off in the weekly mortgage applications data proves durable. We’d then expect a gradual pickup in the second half, but a quick return to the previous peak seems unlikely.

"The pool of potential buyers has been reduced by the surge in layoffs, not all of which will reverse."