Steel Markets

New Home Sales Slow in February

March 23, 2021

New home sales slowed in February, falling 18.2% from January to a seasonally adjusted annual rate of 775,000, according to estimates by the U.S. Census Bureau and the Department of Housing and Urban Development.

“After sales exceeded construction starts by a historic margin at the end of the summer, the pace of sales has now slowed back to the post-Great Recession trend, which is limited by availability of lots, labor, lumber and other building inputs,” said Robert Dietz, chief economist, National Association of Home Builders.

“However, the February sales rate was 8% higher than a year ago, as housing demand continues to be supported by relatively low interest rates, a continued consumer focus on the importance of housing, and solid demand in lower-density markets like suburbs and exurbs.”

The median price for a new home in February was $349,000 and the average selling price was $416,000.

“Housing affordability headwinds are rising for 2021 due to supply-side challenges such as elevated lumber costs and prospects for increased regulatory burdens associated with land development and building,” said Dietz. “Price discipline will be key for 2021 volume growth, given rising material costs.”

For sale inventory at the end of February stood at a seasonally adjusted estimate of 312,000 units, a 4.8-month supply at the current sales rate. The inventory estimate includes houses for sale but not started, those under construction and homes that have been completed. Only 42,000 homes were finished and ready for occupancy at the end of February.