New Home Sales Dip for Second Straight Month, But Prices Surge

For sale real estate pricesBy DEREK KRAVITZ, AP Real Estate Writer

Sales of U.S. new homes fell in February for the second straight month, a reminder that the depressed housing market remains weak despite some improvement.

The Commerce Department said Friday that new-home sales dropped 1.6% last month to a seasonally adjusted annual rate of 313,000 homes. Sales have fallen nearly 7% since December.

While a mild winter and three months of strong job growth have lifted re-sales, those conditions haven't benefited the new-home market. The current pace is less than half the 700,000 that economists consider to be healthy.

Economists cautioned that the housing market is a long way from fully recovering.

"Despite renewed hopes over the turn of the year for an imminent turn in housing, it appears that it is too early for such optimism to translate into a rapid pick-up in real activity," said Yelena Shulyatyeva, an analyst at BNP Paribas.

There were some positive signs in the report. The government revised December's sales figures up to show an annual rate of 336,000, the best sales pace in a year.

And the median sales price for new homes surged in February more than 8%, to $233,700. That's the highest median price since June and could suggest builders are anticipating more sales in the months to come.

Just 150,000 new U.S. homes were for sale in January and February -- the lowest on records dating back to 1963. The supply of new homes on the market has consistently fallen over the past two years, which could help stabilize prices.

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Jennifer Lee, senior economist at BMO Capital Markets, said the price increase was possibly "an indication of homebuilders' growing confidence in their sector."

Though new-home sales represent less than 10% of the housing market, they have an outsize impact on the economy. Each home built creates an average of three jobs for a year and generates about $90,000 in tax revenue, according to the National Association of Home Builders.

Builders are growing more confident after seeing a growing number of people express interest in buying this year. They've responded by requesting the most permits to build single-family homes and apartments since October 2008.

Sales of previously occupied homes have risen more than 13% since July. And January and February made up the best winter for re-sales in five years, when the housing crisis began.

A key reason for the dismal sales in the new-home market is that builders must compete with foreclosures and short sales -- when lenders accept less for a house than what is owed on the mortgage.

Foreclosure activity surged in February across half of U.S. states. The pace of foreclosures is increasing now that states have reached a settlement with the nation's five biggest mortgage lenders over foreclosure abuses.

Builders have also stopped working on many projects because it's been hard for them to get financing or to compete with cheaper resale homes. For many Americans, buying a home remains too big a risk more than four years after the housing bubble burst.

Sales were mixed across the country. They fell 2.4% in the Midwest and 7.2% in the South. They rose 8% in the West and 14.3% in the Northeast.

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Many seniors today face retirement with less savings and lower home equity value than they expected. Their dreams of selling their home and moving to a more suitable climate or lifestyle may now seem difficult to obtain if not impossible given decreasing home values and challenging economic conditions.

July 16 2013 at 12:07 PM Report abuse rate up rate down Reply

prices surge ? LOL
only prices ""surging"" are gasOline and groceries and rents remain HIGH as well.

March 26 2012 at 11:17 AM Report abuse +1 rate up rate down Reply

Prices surged because investors came in and bought...tell the truth worthless huffington post...gone 2012 NObama and his gang....

March 26 2012 at 8:49 AM Report abuse +1 rate up rate down Reply

Another puff piece about Obama. No hope no change. Corzine stole it all.

March 24 2012 at 10:18 PM Report abuse +3 rate up rate down Reply
1 reply to jdykbpl45's comment

A piece about Obama that just forgot to mention Obama a single time?

How many voices do you hear?

March 25 2012 at 3:47 PM Report abuse -1 rate up rate down Reply
1 reply to bggdg's comment

it's all obama and the diMs DELIBERATE actions that led this nation to this point.
the diMs lied and the economy died.
then did nothing when ALL the fha HAD TO DO WAS READJUST THEIR RATES.

March 26 2012 at 11:40 AM Report abuse rate up rate down

And now Fannie & Freddy lost the law suite and must pay the property taxes on the foreclosed homes they (thats us taxpayers ) own. Perhaps Barney Frank, Chris Dodd, Barry Obama, Nancy and Harry along with Warren (my gal pays more in taxes than I do) Buffet can make a substantial contribution to the Liberal cause?????

March 24 2012 at 10:11 AM Report abuse +3 rate up rate down Reply
1 reply to cpo1514's comment

dodd fwanks etc SHOULD BE ON TRIAL.

March 26 2012 at 11:41 AM Report abuse rate up rate down Reply
Samir semaan

What people forget that we have been down on march 2009 on the dow jones index 6100 points and now we are doubled already I believe we are on recovery for a good time and because spending earlier was made on manufacturers and financials and services and now if you count surpluses on counties and states they start have surpluses this is the role of responsive government now spending scales on the federal level and spending come from consumers who are the engines of economy and after the tax seoson many people are going to live their lives and enjoy travel and spend money and have a nice time what people are worried about is the deficit and something must be done about it without affecting medicare and medicaid and those who are disadvantage, and this could be done by enforcing the law on the books.

March 24 2012 at 10:08 AM Report abuse -1 rate up rate down Reply
1 reply to Samir semaan's comment

Fixed rates are so low it forces the saver to buy equities to keep up with inflation. It also forces the pension fund managers to buy equities. You can hope for a brighter future, but there is more risk in stocks than fixed rate investments. Interest rates are too low.

March 25 2012 at 12:35 AM Report abuse rate up rate down Reply

Of course new home sales declined. The inventory is at a bottom. If you examine MLS activity across the country for the last year, it is easy to discern they have actually been moving quite well depleting what is out there. Builders quit developing lots and subdivision's 4 years ago. Only in the last year have the they had the confidence to finally start building a limited number of market homes on the few lots in the few subdivisions that are ready to build on. It is going to be years before new housing returns to a healthy rate.

March 24 2012 at 9:06 AM Report abuse rate up rate down Reply
1 reply to donut999's comment

it's all going to wind up section 8 rentals.

March 26 2012 at 11:18 AM Report abuse rate up rate down Reply

Interesting headline. There were numerous data points (statistics) in the story. But the headline is only that sales of new homes only "dip", while prices "surge".

What is Obamas AOL/HuffPuff and "mainstream" media selling now?

Good news? Not really. Fewer homes sold in most of the country, BUT more sold in the Southwest and Northeast, primarily where houses cost much more than elsewhere (and have dropped badly). So the "average" is higher. It means very little.

Three kinds of lies: Lies, damn lies, and statistics

March 24 2012 at 3:58 AM Report abuse +3 rate up rate down Reply
2 replies to ha6ai's comment

Did you read this article or its headline as being particularly positive?

Do you think a 1.6% decline in sales is something other than a "dip"? Or that an 8% increase in prices in a single month is not a "surge"?

March 24 2012 at 12:35 PM Report abuse -1 rate up rate down Reply
1 reply to bggdg's comment

bg ? and you believe huffingho and aol to be a RELIABLE source for your news ? bwaaaaaha....--
prices remain STABLE here and no DIP either throughout the dimOgenic produced recession.

March 26 2012 at 11:38 AM Report abuse rate up rate down

not necessarily true DUE TO many areas in the northeast not afflicted with the unqualified running there to buy homes as there IS NOTHING THERE FOR THEM.

March 26 2012 at 11:35 AM Report abuse rate up rate down Reply

Picking up foreclosures and turning them into rent houses is a good way to go in the current economy if you can do it. New houses are notoriously poorly constructed and you often don't get what you thought you paid for.

March 23 2012 at 12:21 PM Report abuse -1 rate up rate down Reply