Nationwide, housing market trends are mixed with the West region showing strong new-home sales numbers. February numbers reflected a 19 percent increase overall based on a jump from 502,000 units in January to 512,000 units based on Commerce Department reports. However, this gain is solely due to a 38.5 percent increase in new-home sales in the West while all other regions faltered. Northeast region numbers declined by 24.2 percent while Midwest new-home sales numbers dropped by 17.9 percent. New-home sales in the South regressed by only 4.1 percent.
New-home inventory increased by 240,000 units or 1.7 percent, easing the pricing pressure a bit with the highest gain in housing inventory since October 2009. Even with this increase in new housing stock, inventory levels are still about 50 percent lower than inventory at the height of the housing crisis. At this level and given the pace of sales, it will take only five months to clear the present inventory. Median price for a new home increased by 2.6 percent based on last year’s figure of $301,400.
Compared to existing home figures, the new-home sector is on a roll. In February, existing home sales dropped 7.1 percent. Industry analysts blamed the decline on a very limited supply of existing homes that became available for sale.
Robert Dietz, an economist for the National Association of Home Builders believes that favorable mortgage interest rates and a strong jobs market will drive the housing market entering this year’s spring buying season. However, home builders will have to contend with current construction industry issues such as shortage of skilled labor.