Following a January that saw the highest rate of new-home sales since 2007, new-home sales dipped in February as wetter-than-usual weather dampened the market somewhat.
Sales of new single-family houses during 2020’s second month were at a seasonally adjusted annual pace of 765,000, according to estimates jointly released by the U.S. Census Bureau and the Department of Housing and Urban Development (HUD).
That’s a decrease of 4.4% below January’s upwardly revised rate of 800,000, as February’s precipitation nationwide likely stalled buyer numbers after an unusually warm, dry winter. On the whole, however, February’s numbers remain solid; on an annual basis, February is well ahead of the same month last year, up 14.3%. February’s sales also beat the numbers forecast by economists polled by Reuters, who anticipated a pace of 750,000 units.
Robert Dietz, chief economist for the National Association of Home Builders, noted on the group’s Eye on Housing blog that the January and February sales “were the best recorded seasonally adjusted annualized rates since the Great Recession.”
“Early 2020 will come to be seen as a recent high-water mark in the U.S. housing market,” echoed Matthew Speakman, economist at Zillow, “with sales of both new and existing homes riding a wave of positive momentum, and builders showing confidence and ramping up production.”
February’s sales bring the seasonally-adjusted estimate of new houses for sale to 319,000 at the end of the month. That translates to a supply of 5.0 months at the current sales rate — a level that, while down from the peak of 7.4 months at December 2018, was described by Dietz as “healthy.”
The median sales price of new houses sold in February 2020 was $345,900.
Of course, the real estate industry is bracing for the impact of the coronavirus pandemic, with experts forecasting an inevitable decrease on the horizon due to the outbreak’s economic and social consequences.
“The pace of new home sales will decline during the second quarter due to the impacts of higher unemployment and shutdown effects of parts of the economy, including elements of the real estate sector in certain markets,” said Dietz.
“There are now two eras in the U.S. housing market and economy at large – pre-coronavirus and post-coronavirus – and what happens next is uncertain at best,” concurred Speakman. “The months ahead will almost certainly be a difficult stretch for the industry, but the promise of better times to come on the other side may yet be enough to keep things floating.”
Indeed, given the strong fundamentals displayed by the housing market before coronavirus swept the globe, there’s a general expectation that sales could reignite quickly once the threat is in the rearview.
“Given the momentum housing construction held at the start of 2020,” Dietz said, “the housing industry will certainly be a sector leading the economy in the eventual recovery.”
