“Purchases of new homes in the U.S. fell in February to the lowest level in five months, a sign the industry may take time to pick up after inclement weather damped demand earlier in the year.
“Sales declined 3.3 percent to a 440,000 annualized pace, following a 455,000 rate in the prior month that was the strongest in a year, figures from the Commerce Department showed today in Washington. The median forecast of 77 economists surveyed by Bloomberg called for 445,000.
“Unusually frigid temperatures added to restraints including rising mortgage rates, higher property values, and a lack of supply that kept prospective buyers away from the market for new and existing properties. Bigger gains in employment and consumer sentiment would help spur the recovery in homebuilding, sustaining its contribution to economic growth and boosting earnings at companies such as Lennar Corp. and KB Home.
“There’s a big upside to new-home sales,” said Robert Dye, chief economist at Comerica Inc. in Dallas, who correctly projected the drop in sales last month. “We have a huge amount of pent-up demand and very tight inventories. Mortgage rates, although they’ve risen, are still very low. We expect to see continuing improvement in the housing market.”
“Economists’ estimates ranged from 406,000 to 506,000. The reading for the prior month was revised down from a previously reported 468,000.”
Read full Bloomberg article here.