by David Crowe
The rate of new home sales fell in February to an annual pace of 313,000 down 1.6% from January’s 318,000 but off 6.8% from December’s revised 336,000, which marked a high point since the end of the home buyer tax credit in spring 2010. The three-month moving average sales pace remains the highest in almost two years.
The fall off is likely a combined effect of higher than expected sales in December because of warmer and dryer weather than normal as well potential home buyers’ difficulty obtaining a mortgage and appraisals lower than the agreed upon price. In a separate NAHB survey, sales contract cancellations have ticked up for the last four months suggesting the combined effect of tight credit standards and low appraisals have made it difficult for some buyers to qualify after they signed a sales contract.
Sales continue to be spotty with solid increases in two regions, Northeast up 14.3% and West up 8% while the Midwest and South regions were down 2.4% and 7.2% respectively. The 13,000 decline in the annual sales rate in the South alone accounts for more than the total national change.
The inventory of unsold new homes remains at the lowest level in the data series history that goes back to 1963. The months’ supply ticked up one-tenth to 5.8 because of the slow sales pace. The number of completed and unsold new homes fell to another new low at 54,000.
Median sales price increased by 6.2% to $233,700 and the highest February since 2008. The increase is likely the result of two trends. The increase in sales was in the Northeast and West where prices are higher than the other two regions. And, the sales that did pick up were in the $200,000 to $300,000 range, which reflects both the higher regional variation as well as the preferred price range for the buyers that can qualify for a mortgage.