February New Home Sales: High Water Mark

• February new home sales fell 4.4% from January but up 14.3% from a year ago, to 765,000 (SAAR) according to the U.S. Census Bureau. Data from the prior three months were revised upward.
• The median sales price of new houses sold in February 2020 was $345,900, up 7.8% from the same month last year.
• Inventory of new homes for sale was down 0.9% from January and 6.7% from February 2019.

February’s new home sales data was ancient before it was even released, but still not entirely irrelevant. Early 2020 will come to be seen as a recent high-water mark in the U.S. housing market, with sales of both new and existing homes riding a wave of positive momentum, and builders showing confidence and ramping up production. Coronavirus still felt like a far-away problem, and a strong job market, forgiving weather and exceptionally low mortgage interest rates all helped push more buyers into the market. In hindsight, this calm before the storm wasn’t without its flaws, most-notably exceptionally tight inventory and worsening affordability, especially for often pricier new-construction homes and even at rock-bottom mortgage rates. But by most measures, the housing market looked to be in a good place and primed for a solid spring selling season – a spring selling season that has since been put on indefinite hold. There are now two eras in the U.S. housing market and economy at large – pre-coronavirus and post-coronavirus – and what happens next is uncertain at best. The months ahead will almost certainly be a difficult stretch for the industry, but the promise of better times to come on the other side may yet be enough to keep things floating.