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October 25, 2014

Weather Chills New Home Sales to 5-Month Low

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Weather Chills New Home Sales to 5-Month Low

Sales of new single-family homes dropped 3.3 percent to a seasonally adjusted annual rate of 440,000 in February, the lowest level since last September, the U.S. Department of Housing and Urban Development and U.S. Census Bureau report.

"There is no doubt that the persistently bad weather took a toll on sales in February," says Kevin Kelly, chairman of the National Association of Home Builders. "However, builders continued to increase their inventory of for-sale homes, indicating they still anticipate a relatively strong spring buying season."

NAHB Chief Economist David Crowe says that the builder trade group is still optimistic that 2014 will be a strong year for housing, despite the recent slowdown over the winter months.

"The first-two-month average of 2014 is exactly in line with where 2013 left off,” Crowe says. “If not for the unusual weather, we would easily be ahead of last year's pace. We also continue to see household formations and pent-up demand driving sales forward."    

The inventory of new homes increased to 189,000 units in February -- a 5.2-month supply at the current sales pace. It’s the highest supply of new homes on the market since December 2010, but inventories still remain tight across the nation.

Regional Breakdown

In the Northeast, new-home sales plunged 32.4 percent in February, posting the largest decline since October 2012. New-home sales also dropped 15.9 percent in the West and by 1.5 percent in the South. The Midwest was the only region to gain, soaring 36.7 percent in February, which experts say results from an increase after an unusually low January figure.

Source: National Association of Home Builders and “New Home Sales Fall to 5-Month Low,” Reuters (March 25, 2014)

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