Sales of new single-family homes are up 1.1 percent to 640,000 in February after a sharp downward revision to 633,000 in January (previously 670,000). Sales are up for the third month in a row. Compared to a year ago, total sales are down 19.0 percent. The February level is close to the consensus of 645,000 in an Econoday survey. Sales of new homes have benefited from the recent dip in mortgage interest rates.

The supply of homes is little changed at 8.2 months' worth in February after 8.3 in January, but is above the 6.0 months in February 2022. Homebuilders have managed to keep the supply from burgeoning at a time when mortgage rates have impeded consumers' ability to buy, in part due to higher financing costs but also to elevated prices. The median price of a new single-family home is up 2.7 percent in February to $438,200 and is up 2.5 percent compared to $427,400 in February 2022.

The average Freddie Mac 30-year mortgage rate dipped to 6.36 percent in December from 6.74 percent in November, and fell further to 6.30 percent in January. It then rose slightly to 6.34 percent in February. These rates and moderation in price increases for new residential construction sent some buyers into the market in December and January and on into February. Many of these buyers are willing to commit to buying units not yet started or under construction. The share of new single-family homes purchased in February that were not started is 23 percent, up from 17 percent in January. Buying of new units under construction was about the same at 42 percent in February from 43 percent in January. Depleted stocks of finished homes mean that only 35 percent of purchases are in February after 40 percent in January.

After surging to a 670,000 annualized rate in January, new home sales in February are expected to fall back to 645,000.

New home sales measure the number of newly constructed homes with a committed sale during the month. The level of new home sales indicates housing market trends and, in turn, economic momentum and consumer purchases of furniture and appliances.

This provides a gauge of not only the demand for housing, but the economic momentum. People have to be feeling pretty comfortable and confident in their own financial position to buy a house. Furthermore, this narrow piece of data has a powerful multiplier effect through the economy, and therefore across the markets and your investments. By tracking economic data such as new home sales, investors can gain specific investment ideas as well as broad guidance for managing a portfolio. Each time the construction of a new home begins, it translates to more construction jobs, and income which will be pumped back into the economy. Once the home is sold, it generates revenues for the home builder and the realtor. It brings a myriad of consumption opportunities for the buyer. Refrigerators, washers, dryers and furniture are just a few items new home buyers might purchase. The economic"ripple effect" can be substantial especially when you think a hundred thousand new households around the country are doing this every month. Since the economic backdrop is the most pervasive influence on financial markets, new home sales have a direct bearing on stocks, bonds and commodities. In a more specific sense, trends in the new home sales data carry valuable clues for the stocks of home builders, mortgage lenders and home furnishings companies.