Sales of new single-family homes were nearly unchanged in February at down 0.3 percent to 662,000 at a seasonally adjusted annual rate after a small revision higher to 664,000 in January, and up 5.9 percent from 625,000 in February 2023. The level in February is not materially different from the consensus of 675,000 in the Econoday survey of forecasters.

Sales of new homes continued at a solid pace despite mortgage rates remaining relatively elevated. Some of the sales will be due to homebuyers with a lower rate from a mortgage application in January deciding to buy in February before their rate lock expired. The average rate for a Freddie Mac 30-year fixed rate mortgage was 6.64 percent in January and rose to 6.81 percent in February, and for March to-date averages 6.83 percent.

The supply of new homes available for sale remains plentiful compared to the scarcity of existing units. In February there was 8.4 months' supply of homes, much the same as 8.3 in January and 8.4 in February 2023. The median price of a new home slipped 3.5 percent in February to $400,500 from $414,900 in January and was down 7.6 percent from $433,300 in February 2023. The decrease in price included some discounting on the part of homebuilders, but also reflected that homebuilders are responding to demand for smaller, entry-level properties for first-time buyers and likely to downsizing on the part of retirees.

Homebuilders are finding fewer buyers for projects not yet started, but more where units are already under construction but not completed. The share of homes sold in February for units not started was down to 12 percent in February after 15 percent in January. February is the smallest share since 13 percent in December 2022. Homes under construction had a 45 percent share of sales in February after 41 percent in January. Homes completed account for the remaining 42 percent of sales.

Mortgage rates in January moved lower and helped lift new home sales to a 661,000 annualized rate from 651,000 in December. The consensus for February is a further moderate rise to 675,000.

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.