Luke Sharrett/Bloomberg News
Purchases of new homes increased in February to a seven-month high, indicating the effects of the recent rise in borrowing costs on the U.S. residential real estate market have been modest.
Sales rose 6.1% to a 592,000 annualized pace, Commerce Department data showed March 23. The median forecast in a Bloomberg News survey called for a 564,000 rate. Warmer winter weather probably played a role in boosting demand as purchases in the Midwest surged by the most since October 2012.
The pace of new single-family home purchases is building on a solid 2016, which was the strongest in nine years. Resilient job growth and steadily improving household balance sheets continue to underpin demand as they allow some buyers to withstand higher mortgage rates.
Last month was the strongest reading for a February since 2008. Estimates in the Bloomberg survey ranged from 543,000 to 600,000. The Commerce Department revised the January reading to a 558,000 pace from a previously estimated 555,000.
The Commerce Department said there was 90% confidence that the change in sales last month ranged from an 11.2% drop to a 23.4% increase, underscoring the volatility of the data.
The pickup in demand last month was led by a 30.9% jump in the Midwest. That put the annualized rate of sales in the region at 89,000 in February, the strongest pace since November 2007. Purchases also increased in the West and South.
Last month was the second-warmest February on record, according to the National Oceanic and Atmospheric Administration.
The supply of homes declined to 5.4 months, from 5.6 months in January. There were 266,000 new houses on the market at the end of February.
The median sales price of a new house dropped 4.9% from February 2016 to $296,200.
| By Michelle Jamrisko Bloomberg News |
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