US New Home Sales Unexpectedly Dropped In Feb As Prices Tumbled

After a big surprise surge in existing home sales, new home sales in February disappointed, dropping 0.3% MoM (vs an expected 2.3% increase).

Source: Bloomberg

Despite the decline, new home sales are up 5.9%.

Sales declined in the Northeast and Midwest…

Source: Bloomberg

While homebuilders are buying down rates, we note that mortgage rates jumped back above 7% in February and likely was the driver of the unexpected weakness (despite NAHB sentiment surging).

“Buyers have largely adjusted to the rate environment and we are encouraged by the demand we’re seeing that the onset of the spring selling season,” Jeffrey Mezger, KBHome’s chief executive officer, said on the company’s recent earnings call.

Not sure we can trust the words coming out of your mouth mate…

Source: Bloomberg

Median new home price fell 7.6% y/y to $400,500; average selling price at $485,000..

Source: Bloomberg

That is the lowest median new home price since June 2021… as existing home prices rose in Feb…

Source: Bloomberg

The supply of new homes rose to 463,000 during the month, the highest since October 2022.

Source: Bloomberg

Are builders still banking on Powell folding like broken lawn chair in this election year and saving the world? The price decline is notable though.