New Home Sales in U.S. Was on Strong Footing Prior to Coronavirus Outbreak

According to new data by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau, sales of newly built, single-family homes fell 4.4 percent to a seasonally adjusted annual rate of 765,000 units in February 2020, coming off a sharp upward revision in January 2020.

The February rate is 14.3 percent higher than the February 2019 pace, and January and February readings mark the highest monthly sales paces since July 2007.

"Sales were on solid footing as we entered 2020, but this could be the high water mark for the next few months as consumers contend with the coronavirus outbreak," said Dean Mon, chairman of the National Association of Home Builders (NAHB).

"The February numbers reflect the strong state of the market before coronavirus concerns set in," said NAHB Chief Economist Robert Dietz. "Given the momentum in the housing market at the start of the year, we do expect sales and construction activity to weaken during the third quarter; but housing's potential suggests it will be a sector that will help lead the economy during the eventual rebound once virus mitigation is complete."

A new home sale occurs when a sales contract is signed or a deposit is accepted. The home can be in any stage of construction: not yet started, under construction or completed. In addition to adjusting for seasonal effects, the February reading of 765,000 units is the number of homes that would sell if this pace continued for the next 12 months.

Inventory fell to a 5 months' supply, with 319,000 new single-family homes for sale, 6.7 percent lower than February 2019. Of that total, just 75,000 are completed, ready to occupy. The median sales price was $345,900. The median price of a new home sale a year earlier was $320,800.

Regionally, new home sales are 38.9 percent higher in the Northeast and 1 percent higher in the South. Sales are down 7.3 percent in the Midwest and 17.2 percent in the West.