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Slide Out West Cuts New Home Sales in February
The U.S. Commerce Department reported on Friday that sales of new single-family homes dropped 10.5% in February, although the decline was largely attributable to a big slide in the West that may well turn out to be a one-month fluke.
“While today’s numbers are weaker than expected, they’re generally in line with what builders have been saying in our surveys,” said NAHB President David Pressly. “Demand seems to be tapering off as mortgage rates inch up and it becomes more challenging to afford to buy a home. We believe the market is transitioning to a cooler but still-healthy level.”
“When looking at these numbers, you have to step back and focus more on trends than on month-to-month shifts to see meaningful patterns,” added NAHB Chief Economist David Seiders. “This government report traditionally has lots of month-to-month volatility and is subject to substantial revision,” he said, and “it would not be unusual” to see an upward revision of the 29.4% slump reported for the West last month or some rebound in the region.
Sales of new single-family homes remained above the million-unit mark, at a seasonally adjusted annual rate of 1.08 million in February. Sales improved in both the Northeast and Midwest (by 12.7% and 5.2%, respectively), but fell 6.4% in the South.
The inventory of unsold homes rose to 548,000 units in February, which is a 6.3-month supply at the current sales pace. This was the highest months' supply number since January of 1996.
“One factor in the inventory situation is the substantial housing starts activity that took place in the January-February period as builders took advantage of unseasonably warm weather to get a jump on production schedules,” noted Seiders. “That month’s supply number will most likely come down as housing starts taper off and if the sales pace picks up — as we expect it to.”
NAHB is currently projecting a decline of approximately 8% in new-home sales this year, which would return the market to roughly the same healthy level of activity that was posted in 2004.
Want to Know the Housing Starts Through 2014?
Find out in HousingEconomics.com’s Long-Term Forecast. HousingEconomics.com includes downloadable Excel tables featuring the housing starts forecast, GDP, demographics and more.
To learn more, visit www.housingeconomics.com.
 Attend the Spring Construction Forecast Conference in April
Plan to attend NAHB's Construction Forecast Conference on April 27 at the National Housing Center in Washington, D.C. The conference brings together the nation's premier housing economists and finance experts for an in-depth examination of the economic outlook for the housing industry.
For more information, visit www.nahb.org/cfc.
Give Us Your Perspective on the NAHB Economics Blog
Give your economic perspective on NAHB's economics blog, “Seiders on Housing,” an informal Internet-based forum dealing with economic issues, housing trends, survey research and other topics affecting the housing sector of the economy.
Log onto the blog at http://nahbblog.blogs.com and get direct access to NAHB Chief Economist David Seiders' expert opinions, projections and responses. Then let Seiders know what you think.
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