New-Home Sales Dip in February
March 26, 2012
New-home sales fell in February, declining 1.6 percent compared to the previous month, the Census Bureau reported Friday.
Still, new-home sales were 11.4 percent above February 2011 numbers, reaching an annualized pace of 313,000 in February 2012 compared to 2011’s 281,000.
But at a time when the new-home market was just starting to gain momentum, the decrease in sales may have some in the industry wondering if the sector is really heading toward recovery mode. The Census report closely followed another report released by the Commerce Department last week, which shows that housing starts also dropped in February by 1.1 percent.
Home builder sentiment, however, remains high as builders look at several key indicators that may be signaling a gradual turnaround. For one, the median price of new homes increased in February to $233,700 from $217,000 in January.
Also, inventory has been dropping, reaching 150,000 — a 5.8-month supply, the Census Bureau reports. And permits for future construction rose 5.1 percent, its highest level in more than three years, the Commerce Department reported last week.
The industry faces hurdles, particularly with home buyers continuing to face problems with qualifying for financing, builders say.
"Many people come in pre-approved for mortgages, but, ultimately, can't pass the underwriting process," said David Crowe, chief economist at the National Association of Home Builders. "They're qualified but they can't get a high-enough appraisal on a house."
Source: “New Home Sales Dropped in February,” CNNMoney (March 23, 2012)
Updated: August 16, 2019