Sales of new single-family homes are up 1.8 percent in February to a seasonally adjusted annual rate of 676,000, quite close to the consensus of 679,000 in the Econoday survey of forecasters. Sales are up 5.1 percent compared to a year ago. New home sales reflect uneven conditions across the US by region. Sales are down 21.4 percent in the Northeast where winter weather still holds. Sales are down 13.6 percent in the West where new housing stock is restrained by high construction costs and wildfires. Sales jump 20.6 percent in the Midwest and up 6.6 percent in the South.

In part, sales of new construction are restrained by current mortgage rates. For buyers who qualified for a mortgage in January, the weekly average for a Freddie Mac 30-year fixed rate mortgage topped out at 7.04 percent in the January 16 week. New home sales are for contracts signed in the reporting month. The rate began to decline from there. By late February the rate was as low as 6.76 percent in the February 27 week.

The price of a new single-family home is down 3.0 percent to $414,500 in February after January, and down 1.5 percent compared to a year ago. Some of the moderation in prices is from homebuilder incentives and some is from a shift to building smaller units to serve the entry level market while supplies of existing homes is lean although that is far less the case in recent months. The supply of homes on the market is at 8.9 months in February, little changed from 9.0 months in January, and slightly above 8.7 months in February 2024.
The fierce competition for homes has ebbed and new construction projects are not seeing as many eager buyers sign contracts for unbuilt homes. The share of homes sold in February that was for units not started is 12 percent, for units under construction at 37 percent, and for completed units is 50 percent.

Sales expected to bounce to 679K unit rate in February after dropping surprisingly to 657K in January after rising to 734K in December.

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.