By:Dennis Norman
This morning the U.S. Department of Commerce released a report showing the sale of New Homes in February increased 4.7% over January sales but was still 41.1% less than a year ago.
It will take a lot more than this to conclude that we have “hit bottom”yet in the new home market but I think this is a positive sign and could be indicative of things to come.
The other positive news in this report was that the inventory of new homes continues to drop. Inventory was down to 330,000 new homes for sale at the end of February down 3.5% from Januarys inventory of 342,000 homes. This results in a 12.2 month supply of new homes at the current sales rate which is also an improvement from last months supply of over 13 months.
Prices on new homes appear to maybe be leveling off. The median price for February was $200,900 or $200 less than January.
While I think the date in this report is positive and may indicate we are perhaps approaching the “bottom”I do have a concern though. As I expressed in my post about the increase in new home starts in February I have concern over this. New home starts increased 22% in February and increasing new home inventory is not substantiated by the sales numbers in my opinion. As I mentioned above,new home inventories have been decreasing over the past few months but the current supply of over 12 months is still at least double what is considered a healthy supply so we don’t need to increase it. This is just something to watch in the coming months.
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