New-home sales fall abruptly in February for first time in 3 months

Sales of newly built homes slipped a modest 0.3 percent between January and February to a seasonally adjusted annual rate of 662,000, according to data released Monday by the U.S. Census Bureau.

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Sales of newly built single-family homes unexpectedly dropped slightly from their January levels — the first month-over-month decline recorded in three months.

Sales of newly built homes slipped 0.3 percent between January and February to a seasonally adjusted annual rate of 662,000, according to the United States Census Bureau — 5.9 percent higher than the sales recorded in February 2023. The month-over-month decline also came as the data for the previous month was revised to a higher rate.

Despite the slight drop-off between January and February — traditionally slow months for the housing market — newly built homes remain increasingly popular for home hunters who find themselves faced with extremely low inventory as homeowners choose to stay put instead of deal with 20-year high mortgage rates. Builders, in turn are ramping up construction and offering more concessions to move inventory.

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Census Bureau

“New construction continues to be an outsized share of the housing inventory,” Bright MLS Chief Economist Lisa Sturtevant said in a statement. “With existing homeowners locked into low mortgage rates, homebuilders have benefited, with more prospective homebuyers looking at new homes.”

Builders are also beginning to cater more to homebuyers on a limited budget. According to data from Nerdwallet, half of new homes sold in February cost under $400,000 — 42 percent higher than the amount sold at that price level a year earlier.

February’s decrease in contract signings for new homes also came as mortgage rates moved higher, with high rates currently threatening to put a damper on the spring housing market.

“Mortgage rates rose in February, and the elevated rates took a bite out of new home sales,” NerdWallet home expert Holden Lewis said in a statement.

The median sale price for newly built homes in February was $400,500, while the average sale price was $485,000. The seasonally adjusted estimate of new homes for sale at the end of the month was 463,000, representing a supply of 8.4 months at the current sales rate, according to the Census Bureau.

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