Sales of new single‐family houses in February were at a seasonally adjusted annual rate of 772,000, according to estimates released by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 2% below the revised January rate of 788,000 and 6.2% below the February 2021 estimate of 823,000.
“With resale inventory so low and rental occupancy rates high, the new-home market is close to the only game in town. The problem is, the new-home market is running into its own inventory shortages as well,” says Ali Wolf, chief economist at Zonda. “Home sales would be higher if we had more homes for sale and more builders willing to sell them, but, for now, the ongoing material and labor shortages are holding the market back from full potential.”
The median sales price of new homes sold in February was $400,600, while the average sales price was $511,000.
The seasonally adjusted estimate of new houses for sale was 407,000 at the end of February, representing a 6.3-month supply at the current sales rate.
“While we expect the ongoing lack of existing homes for sale will still support demand for new-home sales this year, given recent developments, the slowdown in sales over the past two months may end up reflecting a turning point going forward,” says Doug Duncan, chief economist at Fannie Mae. “With the rapid rise in mortgage rates, along with increased economic uncertainty given the Russian invasion of Ukraine and the beginning of a monetary policy tightening cycle, new-home sales demand may now be softening.”
Wolf echoes Duncan on tracking rising interest rates and states “moving forward, we need to track the impact of mortgage rates on home sales. For now, consumers are pushed into action because of higher mortgage rates, but eventually some buyers may choose to wait on the sidelines if rates rise too much too fast.”
