February New Home Sales at Highest Level Since 2008

Housing development
Source: Thinkstock
The U.S. Census Bureau Tuesday morning released data on new single-family home sales for February. Sales fell 3.3% month over month, to a seasonally adjusted annual rate of 440,000 from a downwardly revised January sales figure of 455,000. The revised January estimate lopped off 13,000 sales from the original estimate of 468,000.

Economists had expected a seasonally adjusted annual rate of 440,000 for February, so the Census Bureau’s report is right on target. The February rate is 1.1% below the rate for February 2013. Still, the February rate is at its highest level since 2008. At the peak in 2005, new home sales posted a seasonally adjusted annual rate of nearly 1.4 million.

The Census Bureau also reported that the median sales price for new homes sold in February was $261,800, and the average sales price was $317,500. At the end of February, the number of new homes for sale totaled 189,000, a supply of 5.2 months at the current sales rate.

Two important takeaways here are that the average price declined about $5,300 month over month, on top of a $10,000 month-over-month decline in January. Inventory rose by about 5,000 housing units in February and totaled 18,000 more units for sale than at the end of December. As inventory increases, which is showing up in nearly every report on housing over the past year, the rate of growth in home prices will continue to slow.

Homebuilder stocks reacted in mixed fashion to the reports. Meritage Homes Corp. (NYSE: MTH) dropped more than 1% Monday on an analyst’s downgrade from Neutral to Underperform, but gained about 0.4% back Tuesday morning. Year to date, Meritage is down nearly 14%. At the last report on new home sales at the end of February, Meritage stock showed a gain of 1.7% for the year to date. Shares traded Tuesday morning at $41.32, in a 52-week range of $38.42 to $52.95.

Another homebuilder, PulteGroup Inc. (NYSE: PHM) was also downgraded from Equal Weight to Underweight. The call was made by Barclays, though the bank kept its price target at $20. Year to date, PulteGroup’s shares are down about 4%. In mid-morning trading, shares were down 0.4%, at $18.78 in a 52-week range of $14.23 to $24.47.