Contracts for new, single-family home sales increased almost 5% to a 667,000 seasonally adjusted annual rate according to estimates from the joint release of HUD and the Census Bureau. This gain came despite an upward revision for the January data. However, the previously reported December data was revised down significantly to a 588,000 rate.
The months’ supply number improved to 6.1, which indicates the market is stabilizing after the fall off in sales last Fall due to higher interest rates. The return to the long-run trend for sales and recent declines in mortgage interest rates (now around 4.1%) suggest new home sales growth in the months ahead. Moreover, looking at the combined January and February data, new home sales thus far in 2019 are running 2.8% ahead of the comparable months of 2018.
With existing inventory remaining tight, demand exists for new, single-family construction, provided it can be supplied to the market at affordable price points. In February, 60% of new home sales occurred in the $200,000 to $400,000 price range. And compared to February 2018, there was volume growth for sales priced $150,000 to $300,000, with the count of such sales rising from 21,000 to 25,000 year-over-year in February.
Under the revised data, 2018 new single-family home sales summed to 619,000, compared to 613,000 in 2017. Sales significantly slowed during the late months of 2018, but new single-family home contract volume still managed growth last year.
Regionally, thus far in 2019, new home sales are 25% lower in the Northeast, 16% lower in the Midwest and 6% lower in the West. The national gain of 2.8% is due to a 14% pickup in the South, where 60% of new home sales have taken place.
The median new home sales price was estimated to be $315,300. This is down from a year ago when the median was $327,200.
After increasing from August to December, new home inventory has stabilized at 340,000 in recent months. This does mark a gain on a year-over-year basis from February 2018 when inventory stood at 300,000. The current months’ supply number has fallen from 7.2 in October 2018 to a more normalized 6.1 in February.