New home sales at 640,000 a year in February; Average new home prices down 4.5% year-over-year
To Estimated risk per 23.03.2023 10:42:00
Today in the Calculated Risk Real Estate newsletter: New home sales at 640,000 a year in February
And at prices from Census Bureau:
The median selling price for new homes sold in February 2023 was $438,200. The median selling price was $498,700.
The following chart shows median and average new home prices. The median price in February 2023 was $498,700, down 4.5% from last year. The average price was $438,200, up 2.5% from last year. This indicates a decrease in prices compared to last year, although both the median and the average value depend on the composition of the homes sold.
This included contracts signed in February, when mortgage rates were lower and developers were buying at reduced rates. Mortgage rates rose again at the end of February, and this is likely to affect sales in March.
As discussed earlier, the Census Bureau overestimates sales and underestimates inventory when bounce rates rise, see: New Home Sales and Cancellations: Net and Gross Sales. This may be changing now as cancellation rates have begun to decline. When a previously canceled home is resold, the developer counts it as a sale, but the Census Bureau does not (because it has already been counted).
A large number of homes are currently under construction and this suggests that we will see a further increase in completed inventory in the next few months and this will put pressure on new housing prices.
You can subscribe to https://calculatedrisk.substack.com/.