Sales of new homes slumped sharply to a seasonally adjusted annualized rate of 775,000 in February, data from the Census Bureau showed Tuesday.
Economists had expected sales to cool to 875,000 from the hotter than expected initial report of 923,000 in January. The January figure was revised up to 948,000, a new record high for January.
Feburary’s sales figures is 18.2 percent below the revised January rate, but is 8.2 percent above the February 2020 estimate of 716,000.
Extremely low mortgage rates and a surge in demand for single-family homes lifted the residential real estate market last year. But a shortage of houses for sale is pushing up prices and putting homes out of reach of some would-be buyers.
The seasonally-adjusted estimate of new houses for sale at the end of February was 312,000. This represents a supply of 4.8 months at the current sales rate, a month longer than in January and near the long-term average. The lowest on record is 3.5 months hit in October.
The median sales price of new houses sold in February 2021 was $349,400. The average sales price was $416,000. A year ago, the median price was $331,80 and the average price was $386,200.
New homes account for about 14 percent of the housing market. But because homebuilding is labor-intensive and new homes need to be outfitted with consumer goods—such as washing machines, refrigerators, and dishwashers—the category punches above its weight-class when it comes to the broader economy.
Sales were down across the country. The South, the largest regional market for new homes, saw a 14.7 percent decline from January. Sales in the West fell 16.4 percent. Sales in the Midwest were down 37.5 percent. Sales in the Northeast, the smallest market for new homes, fell 11.6 percent.
It is likely that harsh winter weather in much of the country in February depressed sales.