New home sales dip, but builders still have hope for spring

After climbing out of a fall slump, new single-family home sales dipped slightly in February, but that’s probably not enough to dampen the vibe that home builders are enjoying, as other signs point to a (figuratively) sunny spring.

First, the ugh news. Sales of new single-family homes fell 0.3% from February to March, the Census Bureau and HUD reported Monday. That’s 662,000 homes, 2,000 fewer than January’s seasonally adjusted annualized rate of 664,000. Analysts had expected annualized new home sales to hit 675,000 in February. It would have also continued the recovery from a steep drop in new sales from September to November.

The sales dip could cause concern for makers and retailers of appliances, furniture, and other big-ticket items that people buy when they move into a new home.

All right, now to the happier stuff.

Despite the month-over-month dip, new sales in February were still 5.9% higher than the same time last year, the Census Bureau reported, when new sales bottomed out following a boom in the first year of the Covid-19 pandemic.

New single-family housing construction rose 10.7% in February, the National Association of Home Builders reported last week, and the annualized number of housing units breaking ground, 1.52 million, was the highest it’s been since April 2022. The NAHB and Wells Fargo’s Housing Market Index, which asks home builders how they feel about market conditions now and for the next six months, continued its four-month climb.

Another big number home builders are happy about: Bloomberg reported that the inventory of newly built homes for sale is the highest it’s been in nearly 14 years. Stephen Stanley, the top economist at Santander US Capital Markets, told clients in a note shared with Bloomberg that the build-up could be home builders “ramp[ing] up in anticipation for a stellar spring selling season.”