May 27, 2018

The West Drives New-Home Sales Jump

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The West Drives New-Home Sales Jump

New-home sales edged up 2 percent in February to a seasonally adjusted annual rate of 512,000 units. This marks a rebound from The Commerce Department's January’s numbers, which were revised from 494,000 units up to 502,000 units.

Last month's sales gains were solely attributed to the West, where new-home purchases surged 38.5 percent. All other regions faced a decline, with sales dropping 24.2 percent month-over-month in the Northeast, 17.9 percent in the Midwest, and 4.1 percent in the South.

The new-home sales data follows recent news that existing-home sales dropped 7.1 percent in February. Economists attributed that drop to a severely limited number of homes for sale.

While many markets are faced with high home prices due to a limited supply, the new-home sector boasted some inventory improvement in February. Inventory of new homes on the market ticked up 1.7 percent to 240,000 units – the highest since October 2009. Current housing stock, however, remains less than half of what it was during the height of the housing bubble, CNBC reports.

Read more: Why New-Home Buyers May See Longer Waits

Nevertheless, “while builders contend with industry headwinds such as labor shortages, relatively low mortgage interest rates and solid job growth should keep the housing market moving ahead as we enter the spring buying season,” says NAHB Chief Economist Robert Dietz.

Source: National Association of Home Builders and “U.S. New Home Sales Rebound in February,” Reuters (March 23, 2016)