This version corrects how many months in a row new home sales have risen.
Thank you for reading this post, don't forget to subscribe!The numbers: A dip in mortgage rates propelled U.S. home buyers to purchase new homes, boosting sales. The strength in new home sales is due to the low number of options buyers have with previously owned homes.
New home sales rose 1.1% to an annual rate of 640,000 in February, from a revised 633,000 in the prior month, the Commerce Department reported Thursday. The number is seasonally adjusted.
The data from January was revised significantly. New home sales only rose a revised 1.8% to 633,000 in January, compared with the initial estimate of a 7.2% increase to 670,000.
The new home sales data are volatile month-on-month and are often revised.
Sales of new homes have been strong. The broader sector is in recovery mode for now, as existing-home sales also rose by nearly 15% in February.
Economists polled by the Wall Street Journal had forecast new home sales to total 650,000 in February.
But new home sales are still down by 19% compared to the previous year.
Key details: The median sales price of a new home sold in February was $438,200.
The supply of new homes for sale fell 1.2% between January and February, equating to an 8-month supply.
Regionally, the West led the country in new home sales by 8.1%.
The Midwest saw a drop in sales of 1.4%, while the Northeast registered a plunge of 40%.
Big picture: Buyers are highly sensitive to mortgage rates, so a dip earlier this year prompted a jump in sales.
New home sales have been holding up better than existing home sales since home builders are more willing to cut prices or offer incentives than homeowners, who have less motivation to budge from their existing home.
Though mortgage rates are volatile, the bounce in new home sales looks strong for now. But if home builders were to find it harder to access credit, there may be a dip in starts in the future, and ultimately, sales.
What are they saying? “I suspect that new home sales have benefited from the combination of a mild winter and the dip in mortgage rates early this year,” Stephen Stanley, chief U.S. economist at Santander U.. Capital Markets, wrote in a note. “Both of those factors are likely to be fleeting, as mortgage rates jumped back up in early March (though they have fallen again in the wake of the recent banking turmoil).”
Market reaction: Stocks DJIA SPX were up in early trading on Thursday. The yield on the 10-year Treasury note BX:TMUBMUSD10Y fell below 3.5%.
Shares of builders, including D.R. Horton, Inc.
DHI,
Lennar Corp
LEN,
PulteGroup Inc.
PHM,
and Toll Brothers Inc.
TOL,
opened higher during morning trading.
