New-home sales dip slightly in February

Key Takeaways:

– New-home sales reached a seasonally adjusted annual rate of 662,000 in February
– Builder confidence improved to a reading of 51 in March
– Mortgage rates increased in February, impacting the pace of new home sales
– Inventory of new homes available for sale was at 463,000 at the end of January
– Affordability remains a challenge in the housing market, especially for first-time homebuyers
– Median sale price for a new home decreased to $400,500 in February
– Inventory of existing homes is increasing, with 507,000 single-family homes on the market for the week ending March 15

HousingWire:

New-home sales receded slightly in February but continued to track above last year’s pace, reaching a seasonally adjusted annual rate of 662,000 last month, according to data published Monday by the U.S. Census Bureau and the U.S. Department of Housing and Urban Development (HUD). 

While this figure represents a 0.3% decrease from the revised January rate of 664,000 sales, it also marks a 5.9% rise from the February 2023 pace of 625,000 units sold.

Builder confidence, as measured by a survey from the National Association of Home Builders (NAHB), improved to a reading of 51 in March, its highest level since July 2023. Additionally, mortgage applications for new homes surged in February as a lack of existing homes for sale continued to fuel the demand for new construction.

But a slight uptick in mortgage rates held back the pace of new home sales in February, according to NAHB chief economist Robert Dietz. In February, mortgage rates averaged 6.78%, up from 6.64% in January, according to Freddie Mac data. Rates for 30-year conforming loans at HousingWire’s Mortgage Rates Center stood at 7.15% on Monday.

At the end of January, there were 463,000 new homes available for sale, as new construction continues to account for an outsized share of the housing inventory. At the current sales pace, there is an 8.4-month supply of new single-family homes, according to census and HUD data. 

Affordability remains a challenge in the housing market, particularly for first-time homebuyers. In that context, homebuilders have more options to attract buyers. For instance, they can offer to pay down points on a buyer’s mortgage or they can offer builder financing at below-market rates. 

The median sale price for a new home kept falling in February to $400,500, down 7.6% from a year ago. Half of new homes sold in February cost less than  $400,000, according to Holden Lewis, home expert at NerdWallet

“We’ve seen more builders bring smaller, less expensive homes to the market in recent months,” Bright MLS chief economist Lisa Sturtevant said in a statement.

Meanwhile, the inventory of existing homes is loosening up. For the week ending March 15, there were 507,000 single-family homes on the market in the U.S., up 1.3% from a week prior, and up 22% from a year ago, according to data by Altos Research.

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Property Chomp’s Take:

Have you heard the latest news about new-home sales in February? It seems like the market is still going strong, despite a slight dip in sales from January. According to data from the U.S. Census Bureau and the U.S. Department of Housing and Urban Development, new-home sales reached a seasonally adjusted annual rate of 662,000 last month, which is a 5.9% increase from the same time last year.

Builder confidence is also on the rise, with the National Association of Home Builders reporting an improved reading of 51 in March, the highest level since July 2023. This increase in confidence is reflected in the surge of mortgage applications for new homes in February, as the demand for new construction continues to outpace the supply of existing homes for sale.

However, a slight uptick in mortgage rates in February slowed down the pace of new home sales, with rates averaging 6.78% compared to 6.64% in January. Despite this, the median sale price for a new home dropped to $400,500, making homes more affordable for buyers. Builders are also offering incentives to attract buyers, such as paying down points on a buyer’s mortgage or offering below-market rate financing.

On the other hand, the inventory of existing homes is increasing, with more single-family homes on the market compared to last year. This could provide more options for buyers who are looking for a pre-existing home instead of new construction.

Overall, the housing market continues to show resilience and adaptability in the face of changing conditions. With builder confidence on the rise and more affordable housing options becoming available, prospective homebuyers may find themselves in a better position to make their dreams of homeownership a reality.