February new home sales data is another big step in the right direction for the housing market, the second straight month of big gains after a disappointing end to 2016 for sales of newly built homes. Crucially, in addition to sales themselves, the inventory of new homes available to buy also took a much-needed step forward, although inventory of homes for sale overall remains critically low and weighed on sales of existing homes last month. It’s hard to understate how important it will be for builders to continue adding new inventory to the market, especially in the low- and mid-priced segments where so much of the current home buyer demand lies. The overall seasonally adjusted price of new homes sold last month fell to its lowest level since June 2015, a good sign that builders are catering to the less-expensive side of the market, though a wide divergence between median and average prices shows that sales of pricier new homes are also still strong. In general, this report is undoubtedly good news for the housing market as the weather warms up. But a few months of good progress won’t meaningfully change the dynamics of this year’s home shopping season — inventory is tight, competition will be fierce and buyers need to be prepared to weather some frustration and show a lot of patience.
For more on February new home sales data, check out Zillow’s key takeaways.