New-home sales plunge in the West

Americans stepped back from buying new homes in March — the third straight monthly decline — led by a sharp plunge in Western states.

New-home sales slipped 1.5% last month to a seasonally adjusted annual rate of 511,000, the Commerce Department said Monday. That rate has steadily dropped from 519,000 in February and 521,000 in January. Sales plummeted 23.6% in the West, which has been prone to volatile swings as one of the nation’s priciest housing markets.

The market for new housing developments has gotten off to a rocky start. Sales are still running slightly ahead of the year-to-date pace in 2015, yet supplies of new construction are mounting in a possible sign that demand is lower than many builders had hoped.

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Still, some economists see low mortgage rates and an improving job market as strong enough to boost sales in the coming months.

“While new home sales have lost some luster in recent months, we believe they will reaccelerate as we head into [the] spring season,” said Gregory Daco, head of U.S. macroeconomics at Oxford Economics, a forecasting firm.

Sales were flat in the Northeast and rose in the Midwest and South. Prices dipped, with sales declining in Western states where land often commands a higher premium. The median new-home sales price fell 1.8% from a year ago, to $288,000.

The market’s stalling momentum comes amid an incomplete recovery from the housing crash of almost a decade ago.

New-home sales are significantly below the half-century average of more than 650,000. Subprime mortgages helped propel sales as high as 1.28 million in 2005, but the debt resulting from that peak led to series of foreclosures that triggered the Great Recession at the end of 2007.

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