New home sales increased 1.1% month-over-month in February to a seasonally adjusted annual rate of 640,000 units (consensus 650,000) from a downwardly revised 633,000 (from 670,000) in January. On a year-over-year basis, new home sales were down 19.0%. Sales activity edged up for the fourth time in the past five months, though revisions have been part of that. We have seen in the weekly mortgage applications reports that the pullback in mortgage rates spurred some renewed demand among home buyers. Reality is though with rates over 6.5%, and inflation high- and real-income hurt lower affordability and supply pressures remain for many prospective buyers.
US new home sales for February 2023
- New home sales increased 1.1% month-over-month in February to a seasonally adjusted annual rate of 640,000 units (consensus 650,000) from a downwardly revised 633,000 (from 670,000) in January.
- On a year-over-year basis, new home sales were down 19.0%.
- On a year-over-year basis, new home sales were down 19.4%.
- The report reflects how rising mortgage rates are impeding sales of higher-priced homes, evidenced by the 46.9% year-over-year decline in the high-priced West region and declines in both median and average selling prices.
- The median sales price increased 2.5% yr/yr to $438,200 while the average sales price decreased 4.5% to $498,700. The move higher comes after last month’s 0.7% decline in the median selling price was the first decline since August 2020.
- New home sales month-over-month/year-over-year by region: Northeast (-40.0%; -55.3%); Midwest (-1.4%; -20.2%); South (+3.0%; -8.8%); and West (+8.1%; -33.2%).
- At the current sales pace, the supply of new homes for sale stood at 8.2 months, versus 8.3 months in January and 6.0 months in February 2022.
- The percentage of new homes sold for $399,999 or less accounted for 38% of new homes sold versus 46% in January and 45% one year ago.
New home sales month-over-month/year-over-year by region:
- Northeast (-40.0%; -55.3%)
- Midwest (-1.4%; -20.2%)
- South (+3.0%; -8.8%)
- West (+8.1%; -33.2%)
Note new home sales in the West has the highest concentration of higher-priced homes. The report reflects how rising mortgage rates are impeding sales of higher-priced homes, evidenced by the year-over-year declines in both median and average selling prices.
The report confirms the effect of rates and new home sales remain concentrated in higher-priced homes, as inflation pressures, pushed by supply constraints and labor shortages, are curtailing the building of lower-priced homes and pinching affordability for lower-income buyers.
Existing home sales account for 90% of US transactions and are calculated on a contract close basis. New home sales account for the remaining 10% and are based on contract signings.
The big question is after the surge in rates and slash in rates how much damage has been done with the massive wealth erosion.
Source: Census.gov
From The TradersCommunity News Desk