Despite the stubborn elevated mortgage rates, new home sales rose 7% in March from a month ago and are up 6% from a year ago. A wide inventory availability—at 8 months supply—is helping newly constructed home sales to move forward. The homebuilders’ focus on smaller-sized homes is also attracting buyers. The median price of newly constructed homes was $403,600, well below the $435,000 price from three years ago when builders were constructing larger-sized homes. The latest monthly gain is on top of annual gains of the past two years for homebuilders.

Meanwhile, existing homeowner home sales have struggled the past two years due to historic low inventory levels. But the passage of time should bring about more inventory as life-changing events force some homeowners to give up their locked-in low mortgage rates. Mortgage applications to purchase homes are up 4.3% year-to-date, even though an application does not mean an approval or decision to enter the market. Aside from inventory growth, lower mortgage rates will be needed to get homeowners to move.