Sales of new single-family homes plunged to a new record low rate in February, dropping 16.9% from January to adjusted annual rate of 250,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. The pace was 28% behind the pace of February, 2010.
Wall Street was expecting an annual pace of 290,000.
Prices also fell significantly, with the median sales price down 13.9% from January and 5.5% from February, 2010 to $202,100 and the average price down 9% sequentially and 13.4% year-over-year to $246,000.
Inventory of unsold new homes was flat with January at 186,000 but up 20% to an 8.9-month supply from January's 7.4 months and up 11.3% from last February's 8 months. Raw inventory, however, was down 19.8% from February, 2010.
The regional data indicates that harsh winter weather was a factor. The Northeast, normally the most volatile region due to a small survey sample, led the drops with a 57.1% drop to a pace of 15,000 new homes sold, 50% off the pace of February, 2010, when federal home-buyer tax credits were in effect. The Midwest also registered a big drop, down 27.5% to a rate of 29,000, 40.8% below February a year earlier.
The South, the largest region, was down 6.3% to an annual pace of 148,000, 17.8% off the pace of a year earlier. The West was down 14.7% to a rate of 58,000, 34.1% behind February, 2010.
Not seasonally adjusted, the Commerce Department data showed 1,000 new homes sold in the Northeast, 2,000 in the Midwest, 11,000 in the South and 5,000 in the West. The unadjusted inventory level was at a 9.6-month supply.
Carl Reichardt, home building analyst at Wells Fargo Securities, was suspicious of the data. In research note, he wrote, "Simply put, we believe this data does not reflect the reality of the marketplace, although it is feasible that weather played a role in the seasonal adjustment factor. This is just the fifth time in nearly 50 years of data that February sales fell below January on an actual basis. Data from our monthly survey indicates, at worst, a market that has demonstrated a normal seasonal sequential turn in activity, not a negative shift in gross sales from January."
He added, " New home sales data tends to lag field conditions at peaks and troughs in the market as data reported is gross of cancellations. We note the last three months of data were all revised higher as well. While the housing market clearly continues to be soft, we would expect cumulatively significant revision in this month's data ahead."
Michael Rehaut at J.P. Morgan also was wary. "We are only modestly disappointed by this data point, based on three factors: weather, other more stable demand indicators, and this series' high degree of revision."