New home sales in February totaled 662,000, little changed from the 664,000 print seen for January. That was 15,000 less than expected. Smoothing out this volatile number puts the three-month average at 660,000 versus the six-month average of 659,000 and 12-month average of 671,000, recounts Peter Boockvar, editor of The Boock Report.
Of note, the 30-year mortgage rate averaged 7.3% in February, according to Bankrate.com. That was up from 6.96% in January, so that was a possible influence on sales.
There was another increase in the number of homes for sale (we have heard more spec building from the bigger builders) to just shy of the most since 2008 and months’ supply was 8.4. The median home price fell by 3.5% sequentially and by 7.6% year-over-year in part due to mix as more lower-priced homes were sold relative to those above $500,000.
Bottom line: We know the home building business is a better one to be in relative to trying to sell existing homes. And within that, the bigger builders continue to take share from the smaller ones who don’t have the same balance sheet, a higher cost of capital, and less of an ability to offer discounts/mortgage buydowns.
Also, the supply side is something I’m now paying more attention to with regards to new builds and how quickly the spec side is getting absorbed.
