February new home sales drop 18 percent from month prior

In the month of February, a report from the U.S. Census Bureau shows that new home sales fell 18.2 percent from January. However, sales were up 8.2 percent from a year prior, in February 2020.

The median sales price of new houses sold in February 2021 was $349,400, up 5.3 percent from a year ago. There were an estimated 312,000 (seasonally adjusted) new homes available for sale nationwide in February, up 2.6 percent from January but down 4.6 percent year-over-year.

The setback in February new home sales was somewhat expected, due in part to harsh weather that month. The most unexpected was how big the drop was.

Materials prices have surged in recent months – lumber prices were up 59 percent year-over-year in February according to some measures, the largest annual jump since the 1940s.

With the supply of existing homes for-sale sitting at an all-time low, newly constructed homes remain an attractive option for the waves of home shoppers eyeing the market.

While sales activity may have paused somewhat in February, it should resume in coming months as the labor market improves.