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New home sales surprised everyone in January, surging by 7.5 percent to 670,000 units, the highest rate since March 2022. It was, however, only an illusion. That number has now been revised down to 633,000. The more modest number – which is still significantly higher than analysts had expected – means that the February number, a seasonally adjusted annual sales rate of 640,000 units, represents a monthly increase of 1.1 percent. This is down 19 percent from the 790,00-unit rate in February 2022. [newhomesall] The February number wasn’t a surprise. Even before the January revision, analysts had expected a pullback. Those polled by Econoday had a consensus estimate of 645,000 and Trading Economics came in at 650,000. On a non-adjusted basis, there were 59,000 homes sold in February, up from 55,000 in January. This brought the year-to-date numbers to 114,000 versus 141,000 units, respectively. At the end of February, there were an estimated 436,000 new homes available for sale. This is estimated to be an 8.2-month supply at the current sales pace. An estimated 75,000 of those homes are ready for occupancy. The median sales price of a home sold last month was $438,000 and the average was $498,700. A year earlier the respective prices were $427,400 and $522,200. [newhomeprices] Sales in the Northeast were down 40.0 percent from January and 55.3 percent from a year earlier. In the Midwest , the monthly decrease was 1.4 percent for an annual decline of 20.2 percent. Sales rose in both the South and West in February, growing by 3.0 percent and 8.1 percent, but were still lower year-over-year by 33.2 and 10.1 percent, respectively.
A second week of declining interest rates prompted another increase in mortgage activity last week, the third in as many weeks. The Mortgage Bankers Association (MBA) said its Market Composite Index, a measure of mortgage loan application volume, gained 3.0 percent on both a seasonally adjusted and unadjusted basis. The Refinance Index was 5 percent higher than the week ended March 10 but was down by 68 percent from the same week in 2022. Refinancing accounted for 28.6 percent of applications, up from 28.2 percent a week earlier. [refiappschart] The seasonally adjusted Purchase Index increased 2 percent from one week earlier and was up 3 percent on an unadjusted basis. Purchase activity is 36 percent lower year-over-year. [purchaseappschart] "Treasury yields declined last week, driven by uncertainty over the health of the banking sector and worries about the broader impact on the economy. Mortgage rates declined for the second week in a row, with the 30-year fixed rate dropping to 6.48 percent, the lowest level in a month,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “ However, mortgage rates have not dropped as much as Treasury rates due to increased MBS market volatility. The spread between the 30-year fixed and 10-year Treasury remained wide at around 300 basis points, compared to a more typical spread of 180 basis points.” Other Highlights from MBA’s Weekly Mortgage Applications Survey
Existing home sales emerged, at least temporarily, out of a prolonged slump last month, and weren’t even shy about it. The National Association of Realtors® (NAR) said seasonally adjusted annual sales of preowned single-family houses, townhomes, condos, and cooperative apartments hit a seasonally adjusted annual rate of 4.58 million units compared to 4.0 million in January. The 14.5 percent monthly increase snapped a 12-month losing streak and was the largest one-month gain since the 22.4 percent increase in July 2020. [existinghomesdata] Single-family home sales performed even better, rising from 3.59 million units in January to 4.14 million, a 15.3 percent increase. Condo and coop sales grew by 30,000 units to 440,000. The February increases, however, fell far short of restoring sales to their levels a year earlier. Total sales remained down 22.6 percent compared to the 5.92 million unit rate in February 2022. Single-family sales were 21.4 percent and condo sales 32.3 percent lower on an annual basis. Analysts had expected sales to break out of their long slide, but they underestimated the degree to which it would happen. Trading Economics had an analyst consensus of 4.2 million, which would have been a 5 percent increase. Econoday predicted 4.17 million units. “Conscious of changing mortgage rates, home buyers are taking advantage of any rate declines,” said NAR Chief Economist Lawrence Yun. “Moreover, we’re seeing stronger sales gains in areas where home prices are decreasing, and the local economies are adding jobs.”
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