The first read of February new home sales from the Commerce Department was released this morning. Economists had been expecting a decline of 5 percent from January on a seasonally adjusted basis, but instead a non-statistically significant 3.3 percent decrease was reported. Remember that last week we saw existing home sales decline moderately in aggregate but the mix of what is being sold was much better. Looking at the new data along with Metrostudy’s more detailed traffic and sales data and recent survey data on consumers’ plans to buy a home, we continue to see encouraging signs that spring is just around the corner.
The suspicious January reading was revised down. The year-over-year change was inconclusive. In other words, the Census and Commerce Department data can’t really tell us if the short or long trends are changing.
Looking at Metrostudy’s data on traffic and sales per new home community, we are seeing improvement over January despite continued tough weather. In February, the average number of traffic units per community was up 35 percent over January, with most markets covered showing positive growth month over month. And traffic was up 6 percent over 2013. In addition, the month-to-date March traffic average continues the trend over 2013 despite the more severe weather this year.
Reported new contracts per community were again weaker in February, year-over-year, down 18 percent and only slightly more than a third of markets seeing gains in sales year-over-year. But, February saw a substantial improvement month-over-month of 35 percent. Even though the year started slower in sales than 2013, the pattern appears much more normal than last year’s very strong start that tapered once spring began. This year we are riding an increasing trend over the last three months, and have much more positive momentum going into spring.
The Conference Board reported that the Consumer Confidence Index in March increased much more than expected by 5 percent from February. The underlying data collected on intentions to purchase a home suggests strong demand for housing in the spring and summer.
For plans to buy a new home within six months, March saw a slight decline from February’s revised reading but the revision to February was a substantial change from an initially reported 4.8 percent of households indicating they are planning to purchase a home to a revised 5.7 percent. The initial March reading was 5.4 percent. Additionally, plans to buy a new home are up for the month and year-over-year.
Remember that all housing is local. As I mentioned above, over a third of markets actually saw better new home new home sales in February than last year. Areas with the highest improvements in new home sales compared to last year are Will, IL; Frederick, MD; DuPage, IL; Fairfax, VA; and Charles, MD. Markets improving on sales the most over January include Imperial Valley, CA; Frederick, MD; Calvert, MD; Southwest Valley, AZ; and Prince George’s, MD.
Markets in Maryland, Utah, Illinois, Colorado, and Nevada have seen the biggest increases in traffic year-over-year in February. How’s that for defying the snow and ice?