New-Home Sales at Highest Pace Since 2008

March 25, 2015

The harsh winter weather in many parts of the country last month didn’t appear to cool new-home sales. New-home sales are continuing an upward climb this year, rising 7.8 percent in February month over month and reaching a seven-year high, according to newly released housing data from the U.S. Department of Housing and Urban Development and the Census Bureau. New-home sales reached a seasonally adjusted annual rate of 539,000 units in February, the highest sales pace since February 2008.

“Today’s numbers are a great start to the spring buying season,” says Tom Woods, chairman of the National Association of Home Builders. “Hopefully, this is an indicator of how the rest of the year will fare.”

Much of the sales activity has been centered on existing home owners who are trading up to new construction and taking advantage of low mortgage rates, says David Crowe, the NAHB’s chief economist.

"First-time home buyers remain absent from the market, restricted by tight lending conditions," Crowe says.

The increase in sales dampened inventory levels further in February, falling 1.4 percent month over month. The inventory of new homes is at a 4.7-month supply at the current sales pace. Most economists consider a six-month supply a healthy pace for the sector.

New-home sales posted the strongest gains in the Northeast, despite harsh winter weather in February. New-home sales in the Northeast surged 152.9 percent month-over-month. Sales also gained 10.1 percent in the South. On the other hand, sales fell 12.9 percent in the Midwest and by 6 percent in the West month over month in February.

Source: National Association of Home Builders and “U.S. New Home Sales Hit Seven-Year High in February,” Reuters (March 24, 2015)