New U.S. single-family home sales in March recorded their biggest drop in more than 1-1/2 years, snapping three straight months of hefty gains, in a temporary setback for the housing market. The Commerce Department said on Thursday sales declined 11.4 percent to a seasonally adjusted annual rate of 481,000 units. That was the biggest percent drop since July 2013.
February's sales pace was revised up to 543,000 units, the highest level since February 2008, from the previously reported 539,000 units.
Economists polled by Reuters had forecast new home sales, which account for 8.5% of the market, falling only to a 513,000-unit pace last month. Data on Wednesday showed that sales of previously owned homes hit an 18-month high in March.
New homes sales tumbled 33.3% in the Northeast and 3.4 percent in the West. Sales in the South dropped 15.8 percent, the biggest decline since July 2013. They rose 5.9% in the Midwest.
The stock of new houses available on the market rose 1.9% last month to 213,000. Supply still remains less than half of what it was at the height of the housing boom, good news for home builders who will need to ramp up construction.
At March's sales pace it would take 5.3 months to clear the supply of houses on the market, up from 4.6 months in February.