New home sales sink in February

New single-family home sales dropped 18.2% a seasonally adjusted rate of 775,000 from the revised January rate of 948,000, the U.S. Census Bureau and the Department of Housing and Urban Development reported this morning.

The latest report is 8.2% above the February 2020 estimate of 716,000, however.

The seasonally-adjusted estimate of new houses for sale at the end of February was 312,000, representing a 4.8-month supply at the current sales rate.

The National Association of Home Builders (NAHB) attributed February's sales decline to higher interest rates, supply shortages and rising material prices, especially lumber.

“Though buyer traffic remains strong, some home building activity is being delayed due to material shortages,” said NAHB Chairman Chuck Fowke. “This is forcing builders and buyers to grapple with rising affordability issues, as soaring lumber prices have added more than $24,000 to the price of a new home.”

The average sales price for February increased about 1.4% to $416,000 from an average sales price of $410,000. The median price in February fell 1% to $349,400 from $353,200 in the prior month.

February sales declined in all regions of the nation. Sales in the Northeast fell 11.6%, dropped 37.5% in the Midwest, decreased 14.7% in the South, and were down 16.4% in the West.

“While rising material costs and other supply-side issues are causing delays for some projects, other factors contributing to the slowdown include the winter storms in areas like Texas and rising mortgage rates, which are up more than 30 basis points over the past five weeks,” said NAHB Chief Economist Robert Dietz.

This report follows yesterday’s existing-home sales report from the National Association of Realtors that showed total sales falling 6.6% in February. Existing single-family homes were also down 6.6% last month.

The complete Monthly New Residential Sales report for February 2021 is available here.