February 2015 New Home Sales

Sales of new houses increased in February according to the Census Bureau.  On a seasonally adjusted, annualized basis, there were 539,000 units sold in the period.  This 7.8 percent surge in sales is after January’s total was revised higher to 500,000 units (originally 481,000).  Not since April and May of 2008 has the level been at or above the half million mark for two consecutive months.

Regional differences were substantial in the period.  Sales in the South grew 10.1 percent.  Midwest transactions dropped 12.9 percent.  There were 6.0 percent fewer home sold in the West as well.  However, the Northeast sales skyrocketed 152.9 percent!  This will undoubtedly be a tough growth rate to match in the next report even with the Patriots’ victory.

Strong sales have put pressure on the nation’s stock of new homes.  Currently, there are just 208,000 new single family homes on the market.  Of those, just 58,000 are completed and 40,000 have not been started being built.  This could bode well for those employed in construction because at the current sales pace, the inventory would be depleted in just 4.7 months.  Homebuilders do not want to run out of supply.

Prices suffered some in the period.  The median home price dropped 4.8 percent to $275,000.00; this is the third monthly fall in as many months for this cost measure.  The average price measure fared somewhat better, dropping 0.9 percent after falling in January as well.

Housing’s healing pattern appears to be continuing.  Both new and existing home sales levels are greater than a year earlier.  Prices have also moved higher in the last 12 months.  It may not be the economic driver it was a few years ago, but the housing segment of America’s output is still constructive.          (by C. Cox)