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New Home Sales: February Lower As Jan Revised Higher

March 23, 2021
Bottom Line:   While the weather was a factor in the lower sales in February, there were hints that higher interest rates started to take a toll on the red-hot housing market.  Sales in the West, where prices are typically higher, fell over 16%, sharply below the 12-month average pace.  This appears to suggest the increase in rates was a factor.  Overall, sales were still historically strong.  But amid substantial volatility, it appeared the trend had plateaued. Inventories also rose for the fourth month in a row, bringing the months' supply metric to 4.8 from 3.8 in January, still below a normal six months but potentially indicating the supply-chain bottlenecks have had only a limited impact on builders.
New Home Sales FELL by 18.2% to 775k, after the prior month was revised higher to 965k. This compared with market expectations for a decline to 870k, from the unrevised January level of 923k. Sales are now 8.2% ABOVE their year-ago level.
The Inventory of Homes Available for Sale
ROSE by 2.6% to 312k. Inventories are now 4.6% BELOW their year-ago level.
Combined with the decline in sales, the Months' Supply increased to 4.8 months from 3.8 months. This is modestly BELOW a normal level of 6.0 months.
Home Prices
ROSE with median prices 5.3% ABOVE their year-ago level and with average prices 7.7% ABOVE their year-ago level.