New home sales hit 9-month low
New home sales fell 18.2% in February to the lowest in nine months, but prices streaked to their highest level ever. The average new American home now costs $349,400, as the median new home prices rose 5.3% from a year ago.
Why it matters: It's the latest piece of data showing the housing market continues to struggle in 2021, slowing its torrid pace from 2020.
Yes, but: Economists cite unseasonably cold weather in February as an explanation for the weak data and they have a point.
- The average contiguous U.S. temperature during February was 30.6 degrees, 3.2 degrees below the 20th-century average. This ranked as the 19th coldest February in the 127-year period of record, according to the National Centers for Environmental Information.
- February 2021 was the coldest February in the U.S. in more than 30 years, according to a National Oceanic and Atmospheric Administration report.
What's happening: "Rising mortgage rates will likely soften homebuyer demand modestly, while homebuilder constraints, including the ongoing high prices of lumber and other materials, will likely dampen the supply of new homes," Doug Duncan, chief economist at Fannie Mae, told Reuters.
- "However, underlying demand remains strong. The extremely tight supply of existing homes for sale may encourage more homebuyers to turn to new home purchases."