New Home Sales Maintain Strong Momentum

March 24, 2017

New home sales continued their strong 2017 start, rising by more than 6 percent in February from January and by nearly 13 percent from a year ago, HUD and the Census Bureau reported yesterday.

The report said sales of new single-family homes rose to 592,000 in February, 6.1 percent higher than January’s revised 558,000 and 12.8 percent higher than a year ago (525,000).

Regionally, sales improved everywhere except the Northeast, which saw a 21.4 percent drop in February to 33,000 units from 42,000 units, seasonally adjusted, in January, although sales improved by nearly 14 percent from a year ago.

In the South, sales rose by 3.6 percent to 313,000 units in February from 302,000 units in January and improved by nearly 8 percent from a year ago. In the West, sales jumped by 7.5 percent in February to 266,000 units from 262,000 units in January and rose by nearly 7 percent from a year ago. In the Midwest, sales rose by nearly 31 percent to 89,000 units in February from 68,000 in January and improved by nearly 51 percent from a year ago.

The median sales price of new houses sold in February fell to $296,200 from $306,200; the average sales price rose to $390,400 from $355,300.

HUD/Census said the seasonally adjusted estimate of new houses for sale at the end of February rose to 266,000 from 262,000 in January, representing a 5.4 month supply at the current sales rate.

Anika Khan, senior economist with Wells Fargo Securities, Charlotte, N.C., said mild winter weather continued to play a role in the early start to the spring home-buying season.

“Unusually mild weather in February…pulled sales forward,” Khan said. “We suspect sales will slow in the coming months as the [recent] Nor’easter likely stalled activity.

Khan noted the National Association of Home Builders/Wells Fargo Housing Market Index surged in March. “We suspect much of the post-election lift in sentiment reflects hope that the Trump Administration will follow through on curbing regulation, which could ease permit costs,” she said.