Sales of newly built, single-family homes in February increased 1.1 percent to a 640,000 seasonally adjusted annual rate from a downwardly revised reading in January, according to newly released data by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. However, new home sales are down 19 percent compared to a year ago.
New single-family home inventory fell for the fifth straight month. The February reading indicated an 8.2 months supply at the current building pace. A measure near a six months supply is considered balanced. However, single-family resale home inventory stands at a reduced level of two and a half months.
The median new home sale price rose in February to $438,200, up 2.5 percent compared to a year ago. Elevated costs of construction have contributed to a rise in home prices. A year ago, roughly 15 percent of new home sales were priced below $300,000, while that share is now just 10 percent of homes sold.
NAHB's take on the data
“Builders continue to face challenges in terms of higher interest rates, elevated construction costs and access to critical materials like electrical transformers,” says Alicia Huey, chairman of the National Association of Home Builders. “Nonetheless, the lack of existing home inventory means demand for new homes will rise as interest rates decline over the coming quarters.”
“The February new home sales data points to an increase for the monthly pace of single-family construction starts later in 2023 given a rise in builder sentiment and an increase for sales of homes not yet started construction,” says NAHB Chief Economist Robert Dietz. “However, concerns remain about the tightening of credit conditions for acquisition, development and construction loans for smaller builders due to recent stress for the banking system.”
Regional data
Regionally, on a year-to-date basis, new home sales fell in all regions, down 29.2 percent in the Northeast, 21.3 percent in the Midwest, 7.3 percent in the South and 40.6 percent in the West.
