New Home Sales Turn Negative Year-Over-Year, First Time Since 2011

After rising by a revised 3.2 percent January, New Home Sales fell 3.3 percent in February according to data released today by The Census Bureau and the Department of Housing and Urban Development.  The annualized sales pace of 440k homes is the lowest since September 2013.</p

Perhaps more telling from a momentum standpoint, year-over-year sales (Feb 2014 vs Feb 2013 in this case) were negative for the first time since September 2011.  At that time, annual momentum was in the process of improving, and the only other post-crisis move into negative territory came after the homebuyer tax credit expiration in 2010.  That means today’s data is the first move from an established positive trend into negative territory since 2006.</p

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On a non-seasonally adjusted basis therernwere an estimated 35,000 homes sold during the month, leaving an unsoldrninventory of 189,000–slightly higher than January’s revised 188,000 homes.  Taken together with the slower rate of sales, The Census Bureau says this accounts for 5.2 months’ supply of New Homes compared to a revised 5.0 months’ supply in January (4.7 months before revisions).</p

The improvement in sales was drivenrnentirely by activity in the Midwest where new homes sold at the raternof 67,000 units, up 36.7 percent from January and 1.5 percent above sales inrnFebruary 2013. If that seems odd, don’t worry…  The month-over-month margin of error is only ±72.5 percent (meaning the 67k homes sold could really end up being anywhere from 18k – 115k).  Strip out that sort of volatility and we’re seeing a stagnant trend of 440k-460k in place since the beginning of 2013.</p

New Home Sales</b</p