New US single-family home sales fell in February while prices jumped to their highest level in eight months, according to a government report on Friday that was the latest to paint a mixed picture of the housing market. The Commerce Department said sales slipped 1.6 percent to a seasonally adjusted 313,000-unit annual rate, the lowest since October. While January's sales pace was revised down by 3,000 units, that was offset by an upward revision of 12,000 units to December's rate.
"The numbers are telling us that the housing market is slowly coming back. It's still a depressed market, but it's getting better. We have a long way to go," said Patrick Newport, an economist at Global Insight in Lexington, Massachusetts. Economists polled by Reuters had forecast sales at a 325,000-unit rate in February. The median price for a new home rose 8.3 percent to $233,700, the highest level since June.
Compared to February last year, the median price was up 6.2 percent. Home resales fell in February, but prices rose from a year earlier. Housing starts slipped, while permits for home building approached a 3-1/2 year high in February. The hesitant housing market recovery was illustrated by KB Home, the fifth-largest US homebuilder which on Friday said net orders for new homes declined 8 percent in its first quarter as cancellations rose.
The decline is in sharp contrast to the strong order growth reported by other US homebuilders, including D.R. Horton, Pulte and Lennar, who have forecast an improving housing market. The housing market continues to be hobbled by an oversupply of used homes on the market - especially from foreclosures, many of which sell well below their market value.
While the new home sales pace held above 300,000 units, sales are just over a fifth of their 1.389 million unit peak reached in July 2005. "Mindful that more healing needs to be done, we expect new home sales in 2012 to post their first annual increase in seven years, rising 12 percent," said Sam Bullard, a senior economist at Wells Fargo Securities in Charlotte, North Carolina.
Last month, the inventory of new homes on the market was unchanged at a record low 150,000 units. At February's sales pace it would take 5.8 months to clear the houses from the market, up from 5.7 months in January. New home sales last month surged in the Northeast and West, but slumped in the South and Midwest. New home sales account for about 7 percent of the overall housing market and face stiff competition from the used home segment despite low levels of stock.
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