Both existing and new home sales fell in February as the combination of higher interest rates and tight supply led to a difficult buying environment.
New home sales dropped two percent in February to an annual rate of 772,000, from 778, 000 in January. New home sales account for about 10% of the U.S. housing market and are reported by the Census Bureau. Data tracks new home sales as those that have signed a sales contract or accepted a deposit, and the house can be in any stage of construction: not yet started, under construction, or already completed. Supply chain issues, higher costs for building materials and rising mortgage rates are all challenging homebuilders.
Meanwhile, sales of existing homes also fell, dropping 7.2% in February after soaring 6.7% in January. Year-over-year, existing-home sales decreased 2.4%. Monthly sales fell across the country, but were higher in the Northeast and Midwest. Total housing inventory ticked up from January; unsold inventory sits at a 1.7-month supply at the current sales pace—up from the record-low supply in January of 1.6 months and down from two months in February 2021.
