"Supply challenges have also spilled over to the housing market, where builders are struggling with record lumber prices, threatening to worsen an already acute shortage of previously owned homes available for sale.
A report from the Commerce Department on Friday showed new single-family home sales surged 20.7% to a seasonally adjusted annual rate of 1.021 million units last month, the highest since August 2006.
The sales pace blew past economists' expectations for 886,000 units. The market for new homes is benefiting from the dearth of previously owned home.
"Demand is causing new homes to be bought virtually as soon as they hit the market," said from Robert Frick, corporate economist at Navy Federal Credit Union in Vienna, Virginia.
The data helped to lift stocks on Wall Street. The dollar fell against a basket of currencies. U.S. Treasury prices were lower.
TIGHT INVENTORY
The pandemic is driving demand for bigger and more expensive accommodations as millions of Americans continued to work from home and attend classes remotely. Homebuilders, however, are also grappling with shortages of land and workers.
New home sales are drawn from a sample of houses selected from building permits. Sales soared 66.8% year-on-year in March.
Sales surged in the South, Midwest and Northeast, but fell in the West. They were concentrated in the $200,000-$399,999 price range. Sales below the $200,000 price bracket, the sought-after segment of the market, accounted for only 3% of transactions last month.
The median new house price rose 0.8% from a year earlier to $330,800 in March. The National Association of Realtors reported on Thursday that sales of previously owned homes declined for a second straight month in March, with prices hitting an all-time high as supply remained near record lows.
There were 307,000 new homes on the market last month, unchanged from February. At March's sales pace it would take 3.6 months to clear the supply, down from 4.4 months in February.
"Inventories remain tight and while that should be a positive for home building activity, a lack of availability will likely remain a headwind for sales in the near term," said Rubeela Farooqi, chief U.S. economist at High Frequency Economics in White Plains, New York.
About 74% of homes sold last month were either under construction or yet to be built.
(Reporting by Lucia Mutikani; Editing by Chizu Nomiyama)"
U.S. manufacturing, new homes sales underscore booming economy
BY LUCIA MUTIKANI, REUTERS - 11:53 AM ET 4/23/2021
