Sales of newly built, single-family homes in February edged 0.3% lower to a seasonally-adjusted annual rate of 662,000 units, according to newly released data by the U.S. Department of Housing and Urban Development (HUD) and the U.S. Census Bureau. The pace of new home sales in February was up 5.9% from a year earlier.
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.
“While new home sales remained flat in February, our latest home builder surveys show increased levels of confidence driven by the ongoing lean levels of existing home inventory,” said Carl Harris, chairman of the National Association of Home Builders (NAHB) and a custom home builder from Wichita, Kan. “As interest rates subside over the course of 2024, additional home buyers will be priced into the market and new construction will be needed to meet this demand.”
Mortgage rates averaged 6.78% in February, up slightly from 6.64% in January, according to Freddie Mac. This held back the pace of new home sales, NAHB Chief Economist Robert Dietz pointed out. “Our latest builder surveys show that roughly one-quarter of builders reported cutting home prices in March,” Dietz added. “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.”
New single-family home inventory remained elevated at 463,000, up 1.3% from January. This represents an 8.4-month supply at the current building pace. While this is above the six-month supply that is typically considered ‘balanced,’ officials said, it makes up for the lack of existing homes for sale - only a 2.9-month supply.
Regionally year-to-date, new home sales rose highest in the Northeast, up 47%. They increased 29.7% in the Midwest and 41.0% in the West, decreasing by 13.4% in the South.
