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Sales of new US homes edge down unexpectedly in February

By AFP

March 25, 2024 07:42 PM


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US new home sales ticked down surprisingly in February, according to government data released Monday, after January's rate was revised higher.

New single-family home sales were at an annual rate of 662,000 last month, seasonally adjusted, 0.3 percent down from the revised 664,000 figure for January, said the Commerce Department.

The median sales price of new properties sold was $400,500, lower than the month prior as well.

The slight decrease comes as mortgage rates remain at a much higher level than in recent years.

But the situation has also made homeowners reluctant to enter the market to sell their real estate, having locked in lower rates previously, which leads to supply shortages.

In turn, this has supported the sales of new properties, which had risen monthly from November to January.

Compared with a year ago, sales of new single-family houses were 5.9 higher this February.

Analysts warn, however, that new home sales figures can be volatile.

"Unseasonably warm temperatures and below-average levels of snow cover in February probably boosted sales, in contrast to January," according to analysts at Pantheon Macroeconomics in a recent note.

They added that mortgage rates are now so much higher than during the pandemic that "it is prohibitively expensive for many people to move."

This has allowed homebuilders to gain market share, meaning new home sales have become "decoupled from overall mortgage demand" in recent years, Pantheon said.

As of March 21, the popular 30-year fixed-rate mortgage averaged 6.87 percent according to Freddie Mac, sharply higher than in March 2021 when the rate was between 3.0 percent and 3.2 percent.


AFP


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