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- Contracts for new home sales slipped 3.3% from January to February to a seasonally adjusted annualized rate of 440,000. This decline reverses last month’s improvement, but new home sales remain in a relatively strong level by recent standards. A decline in affordability nationally and weather in the Northeast and parts of the Southeast have had an impact.
- Inventories improved steadily throughout 2013 and were 24.3% from a year ago in February and increased a modest 0.5% between January and February. However, the months supply is still 5.2 suggesting an imbalance that favors price growth.
- Low inventories combined with low mortgage rates pressed up on the median sale price in 2013. The median price for a new home under contract eased a modest 1.1% over the 12-month period ending in February to $261,800. The median existing home price was 38.4% lower at $189,200, more than three times the historical average spread of a 12.3%, suggesting that existing homes are a bargain by historical standards.
- Mortgage rate and price increases in 2013 had a strong impact on affordability. However, new home sales remain roughly where they were last spring when mortgage rates were a full percentage point lower and prices were lower by 10% or more. Weather has constrained new production to an extent, but that will abate resulting in more inventory coming on line in six to nine months. Rates will continue to rise through the year, so a sustainable increase in inventory that resulted in a moderate waning in price growth would provide a welcome relief.
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