February 2018 New Home Sales

Sales of new homes declined in February according to the Census Bureau.  Builders sold 618,000 units in the period, down from 622,000 in January.  However, January’s total was upwardly revised by 29,000 homes, so the comparison was more difficult than the initial release suggested.  Additionally, December’s tally was upwardly revised 10,000 units.  Despite all of the upgrades to the previous two periods and the relatively healthy February figure, the year-over-year change in new home sales was just 0.5 percent. 

Regional data were mixed.  Let’s start with the bad news.  Out West, monthly sales plummeted 17.6 percent and are now just 3.1 percent higher versus a year ago.  Midwest sales slumped 3.7 percent and have fallen 8.1 percent in the past twelve months.  And now for the good news.  In the South (the largest region), there were 9.0 percent more contracts signed than in January, but the year-over-year tally is now just 0.6 percent.  Finally, Northeast sales were strong, surging 19.4 percent and gaining 8.8 percent compared to a year earlier.

Price proxies were mixed.  The median new home set the buyer back $326,800, up $3,800 for the month.  However, an average priced home declined $6,000 to $376,700.  As Atlas noted in the existing homes report, lending rates climbed in February, which could be hurting sales of higher priced homes more than others, making the average price more susceptible to falling.

All told, this was not a bad report. Upward revisions made the month-over-month comparisons more challenging, but there is still an upward trend in sales.  However, the West was weak and will need to be monitored in the months ahead to see if its current fragility spreads to other parts of the nation.