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New Home Sales Tick Up in February: NAHB

Written by David Schollaert

March 23, 2023

New, single‐family home sales were up marginally in February, according to a joint report from the US Department of Housing and Urban Development and the US Census Bureau.

construction3Monthly gains were impacted by high mortgage rates and prices, while rising construction costs were also to blame. Despite dull results, signs point towards improvement later in the year, the report said.

Sales of newly constructed single-family homes rose 1.1% month on month (MoM) in February to a 640,000 seasonally adjusted annual rate. Even with the gain, new home sales are down 19% compared to a year ago.

“Builders continue to face challenges in terms of higher interest rates, elevated construction costs, and access to critical materials like electrical transformers,” said NAHB chairman Alicia Huey. “Nonetheless, the lack of existing home inventory means demand for new homes will rise as interest rates decline over the coming quarters.”

Huey is also a custom home builder and developer in Birmingham, Ala.

New single-family home inventory fell for the fifth straight month. Last month’s reading showed a supply of just 8.2 months at the current building pace. A measure near a six months’ supply is considered balanced, the report said, adding that single-family resale home inventory stands at a reduced level of 2.5 months.

The median price for new homes rose to $432,200 in February, up 2.5% vs. a year ago, recovering for the first time in four months.

Regionally, new home sales fell in all regions when compared to the same year-ago period. The West saw the largest percentage decline, down 40.6%, followed by the Northeast (-29.2%), Midwest (-21.3%), and South (-7.3%).

“The February new home sales data points to an increase for the monthly pace of single-family construction starts later in 2023 given a rise in builder sentiment and an increase for sales of homes not yet started construction,” said Robert Dietz, NAHB’s chief economist. “However, concerns remain about the tightening of credit conditions for acquisition, development, and construction loans for smaller builders due to recent stress for the banking system.”

By David Schollaert, david@steelmarketupdate.com

David Schollaert

David Schollaert is a senior analyst for Steel Market Update. David joined SMU after more than a decade in the metals and mining industry in a myriad of different roles. Much of his early experience and expertise were within the coverage and analysis of steel-making raw materials and served previously as senior editor of the CRU Prices Service. Most recently, however, before his return to market analysis, David held roles as a metals buyer and an operations manager for raw material suppliers. Based in CRU’s Pittsburgh office, David can be reached at david@steelmarketupdate.com or 724-720-1008.

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