Home Sales - Sharpest month-over-month decline since 2013

WASHINGTON—New-home sales fell 18.2% in February from January's upwardly revised rate of 948,000 annualized units to 775,000 units during the month. This represents the sharpest month-over-month decline since 2013, noted NAFCU's Curt Long.

"Severe weather across the country had a chilling effect, especially in the Midwest, which dropped 37.5%," explained Long, NAFCU's chief economist and vice president of research. "This is temporary, though, as this month's existing home sales numbers showed the resilient demand for real estate will simply push sales into March or April. New homes listed for sale rose slightly to its highest level since April 2020, but will likely tighten back up in the next release.

"Regardless of the blip, tailwinds are still strong and demand for new homes continues, especially as inventory in the existing home market remains extremely tight,” continued Long. “Rising mortgage rates are becoming a headwind, but they still remain low and the long-term trend is still unknown. NAFCU expects strong new home sales and tight supply through 2021."

Sales Fall in All Four Regions

Sales fell in all four regions during February, with the Midwest suffering the drop (-37.5%), followed by the West (-16.4%), South (-14.7%), and Northeast (-11.6%). Compared to a year ago, sales rose in the South (+20.2%) and Midwest (+4.9%), but were down in the West (-8.1%) and Northeast (-11.6%).

Based on current month sales, there were 4.8 months of supply in February, up 1 month from January. The number of unsold homes left on the market was up 2.6% at 312,000 units, representing a 4.6% reduction from year-ago inventory levels, Long said.

The median new-home price, non-seasonally adjusted, declined from $353,200 in January to $349,400 in February.