US new home sales unexpectedly drop in February
Sales of new US single-family homes unexpectedly fell in February, according to figures released on Wednesday by the Commerce Department.
New home sales declined by 2% from January to a seasonally-adjusted annual rate of 772,000. Analysts had been expecting a level of 810,000.
Meanwhile, the median price of a new home was $400,600, down from $427,400 in January.
The data also showed that the seasonally‐adjusted estimate of new houses for sale at the end of February was 407,000, representing a supply of 6.3 months at the current sales rate.
Ian Shepherdson, chief economist at Pantheon Macroeconomics, said: "The month-on-month dip in sales is not statistically significant, but we have few doubts that the trend is turning down, in response to the abrupt decline in mortgage applications.
"With most of the March data now available, we reckon new mortgage applications for home purchase fell at a 24% annualised rate in the first quarter, and the surge in rates in recent weeks means that a further steep drop in the second quarter is very likely.
"New home sales track mortgage applications with only a short lag...so we are braced for sales quickly to return to their pre-Covid level and then drop to multi-year lows in the late summer. With inventory already quite high, at just over six months, the rate of price gains will slow sharply too."
Oxford Economics said: "We expect new home sales to lose more momentum as we move further into 2022.
"Demand may remain strong, but high home prices and the spike in mortgage rates since the end of 2021 - the most rapid since 1994 - will price some buyers out of the market."