New home sales fall again in February 2022: Massachusetts Homebuyers Homeownership

 U.S. new home sales missed consensus expectations in February as the housing market remained buffeted by affordability and supply chain issues. New home sales fell two percent from January’s revised number to a seasonally adjusted, annual rate of seven hundred seventy two thousand while the median sales price plunged to four hundred and six thousand dollars from January’s revised median house price of four hundred twenty seven thousand five hundred dollars, the U.S. Census Bureau and the U.S. Department of Housing and Urban Development reported. On a year over year basis, the pace of new home sales in February was down 6.2 percent. Sales of new single family homes were down on a monthly and yearly basis in January as well.

 The seasonally adjusted estimate of new houses for sale at the end of February was four hundred and seven thousand, representing a supply of 6.3 months at the current sales rate, according to a press release. Homebuilders have continued to face delays from supply chain bottlenecks, and higher new home prices and rising interest rates are pricing out some homebuyers, First American Deputy Chief Economist Odeta Kushi said in a press release. Kushi noted that a year ago, thirty one percent of new homes sold were priced below three hundred thousand dollars, while last month, only eighteen percent were.  New home sales tend to be more sensitive to rising mortgage rates than existing home sales, Kushi explained, positing that a reason for the difference between new and existing home sales could be the fact that new homes are typically bought by move up buyers, who may feel locked in when mortgage rates are rising.

 “Why move out if you must pay more to move up?” she asked. By region, the number of new construction homes sold in the Northeast ballooned by 59.3 percent on a monthly basis, while they rose 6.3 percent in the Midwest. In the West and South, new residential sales fell thirteen percent and 1.7 percent, respectively. Looking ahead, the Federal Reserve signaling plans to increase interest rates throughout the year will likely provide additional buyer motivation to lock down a mortgage before rates rise any further, which could drive an increase in sales next month, RCLCO Real Estate Consulting principal Kelly Mangold said. 

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