Sales of new homes fall again

WASHINGTON — Sales of U.S. new homes fell in February for the second straight month, a reminder that the depressed housing market remains weak despite some improvement.

The Commerce Department said Friday that new-home sales dropped 1.6 percent last month to a seasonally adjusted annual rate of 313,000 homes. Sales have fallen nearly 7 percent since December.

While a mild winter and three months of strong job growth have lifted re-sales, those conditions haven’t benefited the new-home market. The current pace is less than half the 700,000 that economists consider to be healthy.

Economists cautioned that the housing market is a long way from fully recovering.

“Despite renewed hopes over the turn of the year for an imminent turn in housing, it appears that it is too early for such optimism to translate into a rapid pick-up in real activity,” said Yelena Shulyatyeva, an analyst at BNP Paribas.

There were some positive signs in the report. The government revised December’s sales figures up to show an annual rate of 336,000, the best sales pace in a year.

And the median sales price for new homes surged in February more than 8 percent, to $233,700. That’s the highest median price since June and could suggest builders are anticipating more sales in the months to come.

Just 150,000 new U.S. homes were for sale in January and February — the lowest on records dating back to 1963. The supply of new homes on the market has consistently fallen over the past two years, which could help stabilize prices.

Jennifer Lee, senior economist at BMO Capital Markets, said the price increase was possibly “an indication of homebuilders’ growing confidence in their sector.”

Though new-home sales represent less than 10 percent of the housing market, they have an outsize impact on the economy. Each home built creates an average of three jobs for a year and generates about $90,000 in tax revenue, according to the National Association of Home Builders.

Builders are growing more confident after seeing a growing number of people express interest in buying this year. They’ve responded by requesting the most permits to build single-family homes and apartments since October 2008.

Sales of previously occupied homes have risen more than 13 percent since July. And January and February made up the best winter for re-sales in five years, when the housing crisis began.

A key reason for the dismal sales in the new-home market is that builders must compete with foreclosures and short sales — when lenders accept less for a house than what is owed on the mortgage.

Foreclosure activity surged in February across half of U.S. states. The pace of foreclosures is increasing now that states have reached a settlement with the nation’s five biggest mortgage lenders over foreclosure abuses.

Builders have also stopped working on many projects because it’s been hard for them to get financing or to compete with cheaper resale homes. For many Americans, buying a home remains too big a risk more than four years after the housing bubble burst.

Sales were mixed across the country. They fell 2.4 percent in the Midwest and 7.2 percent in the South. They rose 8 percent in the West and 14.3 percent in the Northeast.

More in Herald Business Journal

Snohomish County’s campaign to land the 797 takes off

Executive Dave Somers announced the formation of a task force to urge Boeing to build the plane here.

For modern women, 98-year-old rejection letters still sting

In a stark new video, female Boeing engineers break the silence about past inopportunity.

Drone’s ease piercing of NY ‘no-fly’ zone underscores risks

An Army Black Hawk helicopter suffered damage to one of its rotor blades, but was able to land safely.

Disney buying large part of 21st Century Fox in $52.4B deal

Before the buyout, 21st Century Fox will spin off the Fox network, stations and cable channels.

Commentary: GM, Boeing fight a war of words over Mars

Boeing is strongly signaling how crucial deep-space exploration is to its future.

Angel of the Winds pays $3.4M for Everett arena naming rights

The casino replaces Xfinity as the lead sponsor for the publicly owned downtown Everett events center.

Delta orders 100 Airbus A321neo jets valued at $12.7 billion

Boeing had hoped to land the deal, offering comparable 737s.

Pain lingers decade after recession

No matter how good things are now, it’s impossible to forget how the collapse affected people.

FCC votes along party lines to end ‘net neutrality’

Republican-controlled FCC junks the principle that said all web traffic must be treated equally.

Most Read