Sales of new U.S. homes unexpectedly plunged in March to the lowest level in eight months, reflecting a broad-based retreat that signals the industry is facing bigger challenges than just bad weather.
Sales dropped 14.5 percent to a 384,000 annualized pace, lower than any forecast of economists surveyed by Bloomberg and the weakest since July, Commerce Department data showed today in Washington. The median forecast of 74 economists surveyed by Bloomberg News called for the pace to accelerate to 450,000.
The housing recovery has slowed as higher borrowing costs and rising prices make properties less affordable. Shortages of buildable lots and skilled labor also have hindered construction as the market heads into its busiest time of year.
“The housing market is in a rut that’s so far not showing signs of getting better,” Guy Berger, a U.S. economist at RBS Securities Inc. in Stamford, Connecticut, said before the report. “They don’t have enough lots, they don’t have enough workers. That’s playing a big role.”
Stock extended earlier losses after the report. The Standard & Poor’s 500 Index dropped 0.3 percent to 1,874.04 at 10:05 a.m. in New York.
Economists’ estimates ranged from 428,000 to 476,000. The Commerce Department revised the February reading up to a 449,000 pace from a previously estimated 440,000.