New home sales edged down in February, killing some market momentum, but remain robust when compared to year ago levels.
Sales of new single-family homes dropped slightly in February to a seasonally adjusted rate of 411,000 homes sold, 4.6% below the revised January rate of 431,000 units.
However, February sales are 12.3% above the February 2012 estimate of 366,000 units, according to the U.S. Census Bureau and the Department of Housing and Urban Development.
New homes sales did not show the same strength that previous existing-home sales posted, but the number of units moved remains moderately strong, analysts at Econoday suggested.
"Today's report somewhat fell below expectations. For now, the sales pace is moderately healthy. However, there are crosscurrents moving ahead. The Fed is keeping downward pressure on mortgage rates, but consumer confidence declined in February," the research firm said.
The median sales price of new homes sold in February picked up considerably from $226,400 in January to $246,800 in the most recent month. The average February sales price was $313,700, up from $286,300 in January.
At the end of February, the number of new homes for sale reached 152,000 units, up from January’s 150,000 homes. This represents a 4.4-month supply homes at today’s sale pace, up from 4.1 months last month.
Paul Diggle, property economist for Capital Economics, noted that the minor drop in February new home sales and the downward revisions to January sales were expected. This shift also suggests the housing recovery is "coming off the boil."
"Driven by favourable valuations, low interest rates and reduced competition from deeply discounted existing homes, we expect the underlying recovery in new home sales to continue this year," Diggle said.
by Christina Mlynski