West Leads Uptick in New Home Sales

Sorohan, Mike msorohan@mba.org

March 24, 2016

New home sales rose in February, solely on the strength of sales in the West, HUD and the Census Bureau reported yesterday.

The report said sales of new single-family houses in February came in at a seasonally adjusted annual rate of 512,000, 2.0 percent higher than the revised January rate of 502,000, but down by 6.1 percent from a year ago (545,000).

Sales fell in every region except the West, which carried the month. Sales there rose by 38.5 percent to 151,000 units in February, seasonally adjusted, from 109,000 in January, and improved by 10.2 percent from a year ago. In the South, sales fell by 4.1 percent to 281,000 units from 293,000 units in January and fell by 14.3 percent from a year ago. In the Northeast, sales fell by 24.2 percent in February to 25,000 units from 33,000 in January and fell by 3.8 percent from a year ago. In the Midwest, sales fell by 17.9 percent to 55,000 units in February from 67,000 in January but improved by 1.9 percent from a year ago.

Mark Vitner, senior economist with Wells Fargo Securities, Charlotte, N.C., said winter volatility is "now likely behind us."

"Sales on a three-month moving average basis continue to trend higher, particularly in the South and West," Vitner said. "The Midwest saw a spike earlier this winter, as the weather proved to be milder than usual."

The median sales price of new houses sold in February rose to $301,400; the average sales price fell to $348,900. The seasonally adjusted estimate of new houses for sale at the end of February was 240,000, representing a 5.6-month supply of 5.6 months at the current sales rate.

"Rising new home sales in the West, which tends to have higher housing prices, helped pull the median sales price up 6.2 percent in February," Vitner said. Inventories are tight, however, particularly when comparing sales with completed homes."

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