New home sales dropped in February for the second consecutive month, the Commerce Department announced Friday. The report follows a week of mixed housing news that indicates the market is still on shaky ground.
Purchases of new homes dropped 1.6 percent last month to a seasonally-adjusted rate of 313,000. This is less than half the 700,000 that economists consider to be the benchmark for a healthy market. New home sales have declined nearly 7 percent since December.
Among the report’s more encouraging signs is that new home sales were up 11.4 percent compared to last year. The median sales price for new homes sold last month was $233,700, the highest median price since last June.
The seasonally adjusted estimate of new houses for sale at the end of February was 150,000, matching January’s unprecedented low. This represents a supply of 5.8 months at the current sales rate.
New home sales rose in the Northeast (14.3 percent) and the West (8 percent) but fell in the South (7.2 percent) and the Midwest (2.4 percent).
This week began with a survey that showed U.S. home builders’ confidence in the housing market was at the highest level in nearly five years. Other reports found that permits for new construction reached four-year highs last month, but that housing starts dipped. Sales of existing homes dipped to a 4.59 million annual rate in February from a 4.63 million pace the previous month, the National Association of Realtors announced this week. However, sales in the first two months of 2012 are the strongest start to a year since 2007.
New-home sales represent less than 10 percent of the housing market, but each home built generates an average of three jobs a year and $90,000 in tax revenue, according to the National Association of Home Builders. Analysts say that the drop in new home sales is due to competition from home foreclosures and short sales.
Donald Liebenson writes news and features for Millionaire Corner. He has been published in the Chicago Tribune, The Chicago Sun-Times, The Los Angeles Times, Fiscal Times, Entertainment Weekly, Huffington Post, and other outlets. He has also served as a marketing writer for Chicago-based Questar Entertainment and distributor Baker & Taylor.
A graduate of the University of Southern California, he is married with a college-age son. He also writes extensively about entertainment.