New home sales were down 4.6% in February from January but up 12.3% from a year ago. The drop in February was from an elevated January that was the highest since mid-2008. The inventory of unsold new homes remains very low by historic standards at 4.4 month’s supply.
Regionally, the Midwest was the only region with an increase, up 14% to an annual rate of 58,000. The Northeast was down 13% in a month with significant snow fall. The South was down 10% from January and down 6% from a year ago. The region did have more rainfall than usual during February and the 2013 average so far remains above the first three quarter averages in 2012. The West fell 2% but remains at levels last seen since early 2008.
Median sales prices rose 3% from last year because more of the homes sold were in the $400,000 plus bracket rather than inflation in individual home prices. Additional house price increases are expected as building costs rise. Building material prices, especially critical components such as lumber and wood sheets, have risen significantly in the past year, labor costs are beginning to rise as builders try to attract lost workers back to the industry and lot prices are starting to rise as the inventory from the past boom is finally absorb but no new development has taken place.
The February sales pace of 411,000 is in line with expectations for the year. NAHB expects new home sales to average 449,000 for 2013 as more consumers regain the confidence to purchase a home. At that rate, the home building industry remains at less than two-thirds of what would be considered a normal market.