New home sales in February increased even as the median home price fell, according to the latest joint release from the U.S. Census Bureau and the U.S. Department of Housing and Urban Development.
Sales of new single-family homes increased to a seasonally adjusted annual rate of 592,000 in February, the report showed. This is an increase of 6.1% from January’s 558,000, and an increase of 12.8% from 525,000 in February last year.
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(Source: Brent Nyitray, FRED, U.S. Census Bureau)
However, while new home sales may have beaten expectations, the market continues to struggle with pent-up demand, one expert explains.
“New home sales rose to 592k, higher than expectations,” said Brent Nyitray, iServe Residential Lending director of capital markets. “New home sales are approaching historical normalcy, however they are well lower than what is needed to meet pent-up demand and population growth.”
But even as new home construction rose, home prices fell. The median sales prices of new homes sold in February fell to $296,200, down from $312,900 in January. This marks the second consecutive month of declines.
In fact, the new home sales category isn’t the only one to see a drop in home prices. Tuesday’s report from the Federal Housing Finance Agency showed home price increases halted for only the second time since 2012.
And inventory continues to slip, leaving less supply for future home sales. The seasonally adjusted estimate of new homes for sale at the end of February was 266,000. That represents a 5.4-month supply at the current sales rate, down from 5.7 months in January.