New home sales came in near expectations, at a 618,000 annualized rate in February with upward revisions in the prior two months totaling 39,000. Despite the results, February sales are up only 0.5 percent year-on-year.
Prices, however, are showing traction, up 0.6 percent in the month to a median $326,800 which is up a very solid 9.7 percent year-on-year. And supply is moving into the market, up a monthly 2.0 percent to 305,000 units for a yearly increase of 16.0 percent. On a sales basis, supply is at a healthy 5.9 months vs 5.8 in January.
The Northeast has been coming on strongly in this report with sales up 19.4 percent in the month to a 37,000 annual rate and an 8.8 percent yearly gain. The South, which is by far the largest housing region, was also strong in the month, up 9.0 percent to 338,000 though this yearly gain is only 0.6 percent. The West fell a monthly 17.6 percent to a 164,000 rate for a year-on-year plus 3.1 percent with the Midwest down 3.7 percent in the month to 79,000 and an 8.1 percent yearly decline.
Sales, whether for new homes or existing, have been struggling to gain traction so far this year. But they did end last year on an up note and heavy weather always makes winter a tough time to judge for housing. But rising supply and a strong jobs market are pluses for the new home market going into the spring selling season which will help offset drag from rising mortgage rates.
Supply has been moving into the market which should help new home sales for February where the annualized rate is expected to come in at 620,000 vs January's 593,000. New home sales surged at the end of last year and strength in February could boost confidence for extending strength into this year.