Economic Report: New Home Sales
Sales of new homes in the US rebounded off their lowest levels on record in February, after a lackluster January in which sales were initially down over 10%. Sales jumed by 4.7% to a seasonally adjusted annual rate of 337,000 units, up from January’s initial estimate of 309,000, which was revised to 322,000 in today’s report. Despite the revision, January’s sales rate was the lowest ever since the series began in 1963. But today’s report was above expectations, as economists were predicting a sales rate closer to 323,000. For some perspective: In all of 2008, 483,000 homes were sold, down from 776,000 in 2007 and 1.05 million in 2006.
The gain in new home sales follows Monday’s existing home sales number, which was also positive and much better than expected. It seems like the housing market may be headed towards recovery, even before President Obama’s controversial and very expensive housing plan takes affect. February’s sales pace was still down 41.1% from last years, though.
The inventory of unsold homes continued to fall, which is good news for a market that is in the process of stabilizing, but still has an overhang of homes for sale. Inventories fell by 2.9% to 330,000, the 14th consecutive monthly decline. But because the sales pace has been so weak, the monthly supply of new homes has stayed high. At the February sales pace, the inventory represented 12.2 months’ supply of homes, slightly off the record high of 12.9 set in January. That number should come closer to the historical average of 6 months for the market to recover substantially.
Regionally, sales rose 9.7% in the South and 6.6% in the West. Sales fell 3.2% in the Northeast and 9.1% in the Midwest.
Prices have yet to recover, despite some positive signs in the housing market:
The median sales price fell to $200,900, down a record 18.1% compared with February 2008. This is the lowest median price since December 2003. – MarketWatch
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