New Home Sales Droop, Housing Recovery Lags

New home sales of single-family homes declined 16.9% in February, reaching a record-low seasonally adjusted annual rate of 250,000 units, according to Commerce Department data released Wednesday.

“Today’s report is primarily a reflection of consumer uncertainty regarding the overall economy,” said Bob Nielsen, chairman of the National Association of Home Builders (NAHB) and a home builder from Reno, Nev. “A recent Gallup poll confirmed that the economy is Americans’ top concern right now. At the same time, even qualified buyers who are ready to make a purchase are facing frustrating challenges in terms of tight consumer lending conditions and inappropriately low appraisal values on new construction.”

The February seasonally-adjusted rate is the lowest since 1963, when records of new home sales began. The data fell short of economists’ estimates, which projected closer to 290,000 seasonally-adjusted units.

“February’s sales numbers add to the mounting evidence that the housing recovery is hesitating along with the inconsistent progress of the economic recovery,” acknowledged NAHB Chief Economist David Crowe. “Another problem, however, is consumer perceptions of where home values are headed, particularly when national indexes do not reflect local markets.” Meanwhile, he said, “The continuing fragile state of the housing market should serve as a flag of caution to policymakers who are considering major changes to the nation’s housing finance system and to crucial tax incentives for homeownership such as the mortgage interest deduction.”

See the Commerce Department’s data release.

Written by Elizabeth Ecker


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