Implications: After a huge increase in January, new home sales fell to a 411,000 annual rate in February. Despite the drop in February, we've just had the best two month period since late 2008 and sales are still up 12.3% from a year ago. The new home market, which is typically the last piece of the housing puzzle to recover, is clearly improving. The months' supply of new homes -- how long it would take to sell the homes in inventory – rose to 4.4, but is still well below the average of 5.7 over the past 20 years and close to the 4.0 months that prevailed in 1998-2004, during the housing boom. This means that as the pace of sales continues to rise over the next few years, home builders will have room to increase inventories. After a large reduction in inventories over the past several years, builders look like they're getting ready for that transition. Inventories have increased in 5 of the last 6 months. The median price of a new home is up 2.9% from a year ago, while average prices are up a whopping 14.5%, showing that higher priced homes are moving faster. In other housing news this morning, the Case-Shiller index, which measures home prices in the 20 largest metro areas, increased 1% in January (seasonally-adjusted) and is up 8.1% from a year ago. Prices rose in all 20 areas, led by San Francisco and Phoenix. We believe the housing sector will have another strong year in 2013 and will keep being a real bright spot for the US economy.
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Posted on Tuesday, March 26, 2013 @ 12:48 PM
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