Sales of new homes are expected to have increased in February and March, when winter weather was receding, according to the new residential sales report to be released Tuesday. But these positive numbers will likely be short-lived as consumers adjust to the effects of increasingly turbulent global politics.
Here are five things to watch out for:
1. A recovery from January’s report is still disappointing
Even though the seasonally adjusted annual rate of new homes sold fell by over 100,000 in the last report, February and March may jump up to a number that matches those recorded last year. In 2025 the annual rate was 642,000 in February and 660,000 in March. The Fed made cuts at the end of 2025, giving this year an edge against last year’s market.
But even if this happens, sales would still be significantly lower than the highest recorded in 2025, where the annual rate was 764,000 in November.
2. Stormy weather could have some impact on February numbers
Parts of the south were pummeled by snow at the beginning of February, hindering buyers from making purchases in the epicenter of new home construction. While these weather conditions were less severe than in January, the snow is likely to have some negative effect. Thawing in March should break this pattern.
3. Mortgage rates jumped in March
From February 26 to March 26, the average interest rate of 30-year fixed mortgage increased .4%. While this may seem miniscule, over the course of the loan this would cause users to incur significant cost, suggesting that some new home sales in March could be negatively affected by this, if only slightly.
4. Prices of new homes and existing homes inch closer together
Traditionally, buying new construction has been a luxury, but in recent years, while existing home prices have been increasing rapidly, new home prices have been on a slow but steady decline. As builders in the sunbelt region become more skilled at churning out houses, the surplus of freshly built homes in the region has caused the median price of new residential construction to come down.
February’s S&P Cotality-Case Shiller Index report continued the trend with an increase in price.
5. Iran War impact
The March report will likely be too early to see significant changes in buyers’ behavior, but the added uncertainty of the war in Iran is likely to dampen sales in the months to come. Still, William Adams, Chief Economist at Fifth Third Bank, says this isn’t a sure thing.
“Consumers have been saying in confidence surveys that they’re concerned about the impact of the war on household finances,” said Adams. “But consumers have been saying one thing about how they feel and spending a different way for years now.”
