U.S. new-home sales missed consensus expectations in February as the housing market remained buffeted by affordability and supply-chain issues.
New-home sales fell 2% from January’s revised number to a seasonally adjusted, annual rate of 772,000, while the median sales price plunged to $400,600 from January’s revised median house price of $427,500, the U.S. Census Bureau and the U.S. Department of Housing and Urban Development reported.
On a year-over-year basis, the pace of new-home sales in February was down 6.2%. Sales of new single-family homes were down on a monthly and yearly basis in January as well.
The seasonally adjusted estimate of new houses for sale at the end of February was 407,000, representing a supply of 6.3 months at the current sales rate, according to a press release.
Homebuilders have continued to face delays from supply-chain bottlenecks, and higher new-home prices and rising interest rates are pricing out some homebuyers, First American Deputy Chief Economist Odeta Kushi said in a press release. Kushi noted that a year ago, 31% of new homes sold were priced below $300,000, while last month, only 18% were.
New-home sales tend to be more sensitive to rising mortgage rates than existing-home sales, Kushi explained, positing that a reason for the difference between new and existing home sales could be the fact that new homes are typically bought by move-up buyers, who may feel locked in when mortgage rates are rising.
“Why move out if you must pay more to move up?” she asked.
By region, the number of new-construction homes sold in the Northeast ballooned by 59.3% on a monthly basis, while they rose 6.3% in the Midwest. In the West and South, new-residential sales fell 13% and 1.7%, respectively.
Looking ahead, the Federal Reserve signaling plans to increase interest rates throughout the year will likely provide additional buyer motivation to lock down a mortgage before rates rise any further, which could drive an increase in sales next month, RCLCO Real Estate Consulting principal Kelly Mangold said.