WASHINGTON – Sales of newly built single-family homes in February dipped slightly for the first time in three months after mortgage rates increased, according to the monthly data from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. Sales, however, continued to track above last year’s pace to a 662,000 seasonally adjusted annual rate. The pace of new home sales in February is up 5.9% from a year earlier.
The median new home sale price in February was $400,500, edging down 3.5% from January, and down 7.6% compared to a year ago. The average sales price was $485,000.
The National Association of Home Builders (NAHB) said home builder surveys show increased levels .of confidence going into the rest of the year, driven by low existing inventory and decreasing interest rates. New construction is poised to meet the demand of home buyers who will be priced into the market, said Carl Harris, NAHB chairman and a custom home builder from Wichita, Kan.
Mortgage rates averaged 6.78% in February compared to 6.64% in January, according to Freddie Mac.
“A slight uptick in mortgage rates held back the pace of new home sales in February,” said NAHB Chief Economist Robert Dietz. “Our latest builder surveys show that roughly one-quarter of builders reported cutting home prices in March. The price cuts, in combination with building slightly smaller homes, can be seen in today’s data that show a 7.6% year-over-year decline for median new home prices.”
A new home sale occurs when a sales contract is signed, or a deposit is accepted. The home can be in any stage of construction: not yet started, under construction or completed. In addition to adjusting for seasonal effects, the February reading of 662,000 units is the number of homes that would sell if this pace continued for the next 12 months.
New single-family home inventory in February remained elevated at a level of 463,000, up 1.3% from January. This represents an 8.4 months’ supply at the current building pace. A measure near a 6 months’ supply is considered balanced. However, with only a 2.9 months’ supply of existing homes for sale, new home inventory can remain above this balanced measure.
Regionally, on a year-to-date basis, new home sales are up 47.0% in the Northeast, 29.7% in the Midwest and 41.0% in the West. New home sales are down 13.4% in the South.
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