New home sales were solid in February before challenges associated with the coronavirus set in on the economy.
Contracts for new, single-family home sales declined slightly in February by 4% to a 756,000 seasonally adjusted annual rate according to estimates from the joint release of HUD and the Census Bureau. However, this marked a 14% gain over the February 2019 pace. Moreover, the January and February sales figures, helped by warm weather during the winter, were the best recorded seasonally adjusted annualized rates since the Great Recession.
The current months’ supply of new single-family homes stands at a healthy level of 5.0 after peaking at an elevated 7.4 in December 2018. After rising over much of the post-Great Recession cycle, new home inventory measurably declined from January of 2019 until stabilizing in September and rising slightly in recent months. The count of completed, ready-to-occupy new homes is 75,000 homes nationwide.
The pace of new home sales will decline during the second quarter due to the impacts of higher unemployment and shutdown effects of parts of the economy, including elements of the real estate sector in certain markets. However, given the momentum housing construction held at the start of 2020, the housing industry will certainly be a sector leading the economy in the eventual recovery.