New home sales measure the number of newly constructed homes with a committed sale during the month. The level of new home sales indicates housing market trends and, in turn, economic momentum and consumer purchases of furniture and appliances. Why Investors Care
| Released on 3/26/07 For Feb 2007 | ||||||||||||
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Highlights
New home sales fell sharply in February, down 3.9 percent to a lower-than-expected annual rate of 848,000 units -- the lowest rate in nearly seven years. January's data were revised downward by a sharp 55,000 while December was revised down an even sharper 76,000, adding salt to the wound.
Perhaps the worst news in the report was a big spike in supply to 8.1 months -- up from 7.3 months in January and 6.1 months in December and the highest level in 16 years. The median price, despite the rise in supply, rose 1.5 percent in the month to $250,000.
February sales were sharply lower in the Northeast and Midwest, areas hit by heavy weather in the month, but sales were sharply higher in the West which enjoyed unusual warmth. New home sales are counted at the time of contract, pointing to a strong weather effect in the month.
Easing the urgency of the report is last week's strong sales report for existing homes. But falling sales of new homes and rising supply are matters of urgency for both the nation's home builders and home-products retailers. Treasuries firmed while both the dollar and stocks fell back in immediate reaction to the report.
New home sales fell a sharp 16.6 percent in January to an annual rate of 937,000 units -- the lowest rate in four years. Sales declined in all regions especially in the West where sales hit a 12-year low. Damping the prospects for any immediate improvement in housing construction, supply rose sharply to 6.8 months from 5.7 months in December. Weather may have cut sales in January with severe weather in parts of the U.S. at month-end, indicating that sales are not as soft as the numbers at face value. But more recently existing home sales for February continued to rise with a 3.9 percent rise in February. Markets will be watching to see if this carries over to new homes.
New home sales Consensus Forecast for February 06: .980 million-unit rate
Range: .900 million to 1.030 million-unit rate
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There is no question that lower interest rates boost home sales. Other factors also impact housing decisisions, such as employment and income growth, and wealth stemming from stock market gains. |
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