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Sales of newly built single-family homes unexpectedly dropped slightly from their January levels — the first month-over-month decline recorded in three months.
Sales of newly built homes slipped 0.3 percent between January and February to a seasonally adjusted annual rate of 662,000, according to the United States Census Bureau — 5.9 percent higher than the sales recorded in February 2023. The month-over-month decline also came as the data for the previous month was revised to a higher rate.
Despite the slight drop-off between January and February — traditionally slow months for the housing market — newly built homes remain increasingly popular for home hunters who find themselves faced with extremely low inventory as homeowners choose to stay put instead of deal with 20-year high mortgage rates. Builders, in turn are ramping up construction and offering more concessions to move inventory.
Census Bureau
“New construction continues to be an outsized share of the housing inventory,” Bright MLS Chief Economist Lisa Sturtevant said in a statement. “With existing homeowners locked into low mortgage rates, homebuilders have benefited, with more prospective homebuyers looking at new homes.”
Builders are also beginning to cater more to homebuyers on a limited budget. According to data from Nerdwallet, half of new homes sold in February cost under $400,000 — 42 percent higher than the amount sold at that price level a year earlier.
February’s decrease in contract signings for new homes also came as mortgage rates moved higher, with high rates currently threatening to put a damper on the spring housing market.
“Mortgage rates rose in February, and the elevated rates took a bite out of new home sales,” NerdWallet home expert Holden Lewis said in a statement.
The median sale price for newly built homes in February was $400,500, while the average sale price was $485,000. The seasonally adjusted estimate of new homes for sale at the end of the month was 463,000, representing a supply of 8.4 months at the current sales rate, according to the Census Bureau.
