New Home Sales
This morning the Commerce Department just reported that new-home sales dropped 1.6 percent in February to a seasonally adjusted annual rate of 313,000 homes.
New home sales have fallen nearly 7 percent just since December. The current pace of sales is less than half the 700,000 that economists consider to be healthy.
Just 150,000 new U.S. homes were for sale in January and February—the lowest on records dating back to 1963.
Though new-home sales represent less than 10 percent of the housing market, they have an outsize impact on the economy. The National Association of Home Builders estimates each home built creates an average of three jobs for a year and generates about $90,000 in tax revenue.
Many believe the reason for the dismal sales in the new-home market is that builders must compete with foreclosures and short sales when lenders accept less for a house than what is owed on the mortgage.
Today’s report was not all bad news, as it also showed that the government revised December’s new home sales figures up to show an annual rate of 336,000, the best sales pace in a year.Also, the median sales price for new homes surged in February more than 8 percent, to $233,700. That’s the highest median price since June and could suggest builders are anticipating more sales in the months to come.
Here in the West, new home sales actually rose 8 percent! But the best region of the country was in the Northeast, where sales jumped by 14.3 percent!
