Continuing a recent string of better than expected housing market reports, the Commerce Department released a report on Wednesday showing that new home sales in the month of February unexpectedly rebounded from a record low.
The report showed that new home sales rose 4.7 percent to an annual rate of 337,000 in February from an upwardly revised January rate of 322,000. Economists had expected sales to fall to 300,000 from the 309,000 originally reported for the previous month.
While the new home sales for January were upwardly revised from the original number, it still marked the lowest level on records dating back to 1963.
A continued decrease in home prices likely contributed to the rebound in sales, with the median sales price of new houses sold in February slipping to $200,900, down 2.9 percent from $206,800 in January. The median sales price is down 18.1 percent compared to the same month a year ago.
The unexpected increase in new home sales also reflected sales growth in the South and the West, where new home sales rose by 9.7 percent and 6.6 percent, respectively. The increases more than offset decreases in sales in the Northeast and the Midwest.
Despite the monthly increase in new home sales, however, the Commerce Department noted that new home sales were down 41.1 percent compared to 572,000 in February of 2008.
Meanwhile, the report also showed that the seasonally adjusted estimate of new houses for sale at the end of February was 330,000 compared to 340,000 at the end of the previous month. This represents a supply of 12.2 months at the current sales rate, down from 12.9 months in January.
As mentioned above, the unexpected increase in new home sales represents the latest in a recent string of better than expected housing data, with a National Association of Realtors' report released on Monday showing an unexpected increase in existing home sales.
The report showed that existing home sales rose 5.1 percent to a seasonally adjusted annual rate of 4.72 million units in February from a pace of 4.49 million units in January. Economists had expected sales to slip to a 4.45 million unit rate.
At the time, Lawrence Yun, NAR chief economist, noted, Because entry level buyers are shopping for bargains, distressed sales accounted for 40 to 45 percent of transactions in February.
Our analysis shows that distressed homes typically are selling for 20 percent less than the normal market price, and this naturally is drawing down the overall median price, Yun added.
The report showed that the national median existing-home price for all housing types fell 15.5 percent to $165,400 in February from $195,800 in the same month a year ago, although the median price showed a modest increase sequentially.
Additionally, the Commerce Department released a report last Tuesday showing an unexpected increase in housing starts in the month of February. The growth was largely due to a significant jump in new construction of multi-family structures.
The report showed that housing starts rose 22.2 percent to an annual rate of 583,000 in February from a revised January estimate of 477,000. Economists had expected starts to fall to 450,000 from the 466,000 originally reported for the previous month.
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