US new home sales slow in February

Washington: Sales of new US homes weakened further in February, hitting the slowest sales pace in four months as home buying retreated in the fire-stricken West, according to government data released Friday.

Meanwhile the supply of new single-family houses available for sale rose and prices moderated, pointing to some easing in what has been an exceedingly tight market.

Total sales of newly constructed houses fell a token 0.6 percent from January to an annual rate of 618,000 units, seasonally adjusted, largely in line with economists’ expectations, Commerce Department data showed.

The dip brought the sales pace to its slowest pace since October and marked the third monthly decline in a row.

However, the sales rate was still 0.5 percent higher than February of last year.

Officials warn, however, that the sales figures are highly volatile and the February numbers were well within broad margins of error.

RDQ Economics said given the statistical insignificance of the decline, the February numbers did not appear to break the gradual upward trend that began seven years ago.

“Our thesis on housing for 2018 is that there is a shortage of new housing stock relative to desired household formation, which will keep pushing up housing activity,” the company said in a briefing note.

In the South, the largest region by volume, sales rose nine percent, and the Northeast saw a 19.4 percent gain, but this was not enough to offset declines 17.6 percent in the West and 3.7 percent in the Midwest.

Meanwhile, the stock of new homes on the market rose two percent to 305,000 units, the highest level since the height of the housing crisis in March 2009.

The slower sales pace also meant the supply increased 1.7 percent to 5.9 months, the highest since August.

The median sales price edged 0.6 percent higher to $326,800 but the average sales price fell slightly to $376,700, suggesting falling prices at the higher end of the market.

Analysts say the pace of construction has not kept up with strong demand in the current economic expansion, producing an very tight housing market and rising prices.

But rising interest rates and changes to property tax deductions enacted in December are set to make homes even less affordable, weighing on demand.