Sales of new single-family homes dropped for the third consecutive month in February, mostly due to plunges in sales in the Midwest and West, the Commerce Department reported last week. Both regions are seeing a rapid price growth and shortage of homes for sale.
The nationwide drop was modest, at 0.6 percent month over month on a seasonally adjusted annual rate of 618,000 units. But new-home sales saw a 17.6 percent drop in the West and 3.7 percent drop in the Midwest. Meanwhile, sales in the Northeast rose 19.4 percent and sales in the South increased 9 percent.
“New home sales are at a steady level,” says Randy Noel, chairman of the National Association of REALTORS®. “As housing demand grows, builders need to manage increasing costs for labor, lots, and building materials to keep their homes competitively priced.”
The housing industry has been calling for a ramp up in new-home construction to help make up for a record low number of existing-homes for sale. Lawrence Yun, the chief economist of the National Association of REALTORS®, recently called new-home starts “
vastly inadequate.”
“The key to economic prosperity at this juncture of economic expansion is to produce more new homes,” Yun said in response to last week’s report from the Commerce Department showing a decrease in new-home construction in February. “That will help with job creation and reduce the swift price appreciation in several markets.”
The builder’s trade group remains optimistic for a gradual strengthening in the single-family housing sector this year.
“Demographic tailwinds point to higher demand for single-family homes in the months ahead,” says Robert Dietz, NAHB’s chief economist. “Combined with solid job market data, we expect more consumers to enter the housing market this year.”
The inventory of new-home sales for sale was 305,000 in February, which is a 5.9-month supply at the current sales pace, the Commerce Department reported. The median sales price of new homes sold in February was $326,800, up 9.7 percent from a year ago.
Source: National Association of Home Builders and “U.S. New Home Sales Fall for Third Straight Month in February,” Reuters (March 23, 2018)
