New home sales in February were at a seasonally adjusted annual rate of 640,000, an increase of 1.1% compared with January but down 19% compared with February 2022, according to estimates from the U.S. Census Bureau and U.S. Department of Housing and Urban Development.
The median sales price of a new home sold in February was $438,200. The average sales price was $498,700.
As of the end of the month there were about 436,000 new homes available for sale in the U.S. That’s about an 8.2-month supply at the current sales rate.
“New-home sales have picked up in recent months alongside lower rates and as builders continue to offer incentives,” explains Odeta Kushi, deputy chief economist for First American, in a statement. “However, mortgage rates ticked up at the end of February, which may imply some weakness in upcoming home sales data. Nevertheless, when existing homes for sale are nearly non-existent, a new home at the right price may be an attractive option for potential home buyers.”
Because so many homeowners are now rate-locked into their existing mortgages and homes, existing-home sales make up a shrinking share of overall home sales – while the share of new home sales has increased.
“New-home inventory as a share of total home inventory in February reached 27 percent,” Kushi says. “From 2000 until the pandemic, new homes on average made up about 11 percent of total inventory. The shift is result of declining existing-home inventory and increasing new-home inventory.
“While new-home inventory has increased compared with a year ago, only 16.5 percent of the total new-home inventory is completed and ready to occupy, down from more than 20 percent pre-pandemic,” Kushi adds. “This count has been increasing in recent months and is up 125 percent year over year.”
Kushi further notes that a new home sale can occur during any stage of construction.
“Higher builder costs remain a headwind to building more entry-level homes,” she says. “In February, only 12 percent of new-home sales were priced below $300,000, down from 15 percent one year ago and well below the pre-pandemic level of 43 percent in 2019.”