New home sales fall to record low in February
* New home sales dipped 2.2% to a seasonally adjusted annual rate of 308,000 in February from an upwardly revised 315,000 in January. That was slightly below forecasts for a sales rate of 315,000 and the lowest level in 47 years of record-keeping.
* Regionally, sales dropped 20% in the Northeast and 18% in the Midwest. They fell 4.6% in the South, but jumped 20.8% in the West.
* The raw number of homes for sale inched up to 236,000 from 233,000 in January. Compared with a year earlier, supply was down 28%. The months supply at current sales pace indicator of inventory climbed to 9.2 from 8.9. Median prices rose 6.1% to $220,500 from $207,900 a month earlier. On a year-over-year basis, prices were up 5.2%, the biggest yearly gain since September 2007.
What's the story on housing? The market remains stuck in the doldrums, that's what. New home sales slumped to the lowest level since at least 1963, while a key measure of market supply worsened. If there's a silver lining, it's that median prices increased at the fastest year-over-year rate since late 2007. We'll likely see some pick up in the March and April figures as well, with buyers looking to get in before the tax credit expires. The credit-fueled pop won't be anything like what we saw the first time around however.
Stepping back for a minute to look at the big picture, I can't help but point out (again) how affordable housing is. Cheap rates and cheap home prices have restored the affordability that was sorely lacking a few years ago. Core buyers and investors are out there, and they're buying product that's priced right. This is why I don't expect a huge new collapse in the housing market, just more churning near these depressed levels.