New home sales in the U.S. unexpectedly showed a substantial decrease in the month of March, according to a report released by the Commerce Department on Wednesday, with sales falling to their lowest level in eight months.
The report said new home sales plunged 14.5 percent to an annual rate of 384,000 in March from the revised February rate of 449,000.
The steep drop came as a surprise to economists, who had expected new home sales to climb to a rate of 455,000 from the 440,000 originally reported for the previous month.
With the unexpected decrease, new home sales fell to their lowest level annual rate since hitting 373,000 in July of last year.
Peter Boockvar, managing director at the Lindsey Group, said, "A 384,000 sales pace is below the 1991 recession bottom of 401,000 for perspective with an obviously smaller U.S. population then."
"The bright side though is the large upside that should be ahead of us in years to come as households form but also comes with the greater competition from those wanting to rent," he added. "The U.S. recovery remains in fits and starts."
New home sales in the Midwest region showed a notable 21.5 percent drop, while sales in the West and South tumbled by 16.7 percent and 14.4 percent, respectively.
On the other hand, the Commerce Department said new home sales in the Northeast region increased by 12.5 percent.
The report also showed that the median sales price of new houses sold in March was $290,000, up 11.2 percent from $260,900 in February and up 12.6 percent from $257,500 in the same month a year ago.
Additionally, the Commerce Department said there were an estimated 193,000 houses for sale at the end of March compared to the 187,000 houses for sale at the end of the previous month.
The housing inventory in March represents 6.0 months of supply at the current sales rate compared to 5.0 months of supply in February.
On Tuesday, the National Association of Realtors released a separate report showing a smaller than expected drop in existing home sales in the month of March.
NAR said existing home sales edged down 0.2 percent to a seasonally adjusted annual rate of 4.59 million in March from 4.60 million in February. Economists had been expecting existing home sales to drop to an annual rate of 4.56 million.
While the drop was smaller than expected, existing home sales still fell for the seventh time in eight months and hit their lowest level since July of 2012.
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April 24, 2026 15:15 ET Economics news flow was relatively light this week even as the conflict in the Middle East continued, raising concerns for policymakers. In the U.S., spending data, initial jobless claims and pending home sales were the highlights. Business confidence in the biggest euro area economy was in focus in Europe. Inflation data from Japan gained attention in Asia.