New home sales totaled 772,000 in February, 38,000 fewer than expected, and January was down 13,000 to 788,000. Keep in mind that the average 30-year mortgage rate was about 4.10% in February, compared to 4.5% today and 3.55% in January, according to Bankrate.

The monthly supply did rise from 6.1 to 6.3 and remained at the long-term average, which contrasts with the lackluster levels of existing homes for sale. It’s important to keep an eye on this, because despite all the supply pressures that are changing when homes are completed, not started, the supply of new homes has been on the rise. In fact, the number of new homes for sale is at its highest level since August 2008 due to the headwinds of the bubble.

Median home prices rose a lot each month to $400,600, up 10.7% year over year, due to the huge impact of the mix. This fell from $427,400 to a mixed point, with sales of homes priced between $2-400,000 picking up and sales of homes priced between $200,000 falling. The average price is now over $500,000 for the first time.

At the end of the day, lack of existing homes for sale, faced with labor shortages and the difficulty of procuring enough raw materials, appliances, garage doors, windows, etc…, builders have the largest number of homes for sale in 14 years. With household formation slowing and now mortgage rates rising, hopefully this will lead to lower prices, which will better position first-time buyers to buy instead of having to rent where prices are rising by double digits. If you’re a long-term home builder, of course take note, but I’m sure you’ve done so because of the recent spike in mortgage rates. I’m not too long myself.

New Home Sales

# New home for sale

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Peter Boukwall
Chief Investment Officer
Blakely Advisory Group
Direct: 973-244-4211
peter.boockvar -at- bleakleyadvisor -dot-com

Booker report editor
www.boockreport.com