An estimated 765,000 new-home sales took place in February 2020, according to the U.S. Census Bureau. [1]
This represents a 4.4% drop from January’s revised rate of 800,000 but is 14.3% above February 2019’s estimate of 669,000.
The Bureau reports that the median sales price for a new house sold in February 2020 was $345,900 and the average sales price was $403,800.
Additionally, the estimate for available inventory at the end of February was 319,000, which is a 5-month supply at the current sales rate.
Just two regions post month-over-month gains in new-home sales—the Northeast and the South. The Northeast recorded a 38.9% increase while the South posted a rise of 1%.
The West region recorded a 17.2% decline from January to February.
Twenty-seven percent of homes sold in February were priced between $200,000 and $299,000. This is slightly higher than the number of homes sold between $300,000 and $399,000—26%.
Eighteen percent of homes sold in the month were priced over $500,000.
While February’s numbers are strong, Lewis Holden, Home and Mortgage Specialist, NerdWallet, said February could be the “last hurrah” for new-home sales for several months.
“New home sales are likely to fall drastically in the coming months as potential buyers hunker down in the homes that they want to move out of,” Lewis said.
Redfin reported previously [2]that nearly one-third of homebuyers and sellers expect home prices to rise when the next recession hits—a reversal from earlier this year when 56% expected home prices to increase during the next recession.
According to the survey, 25% polled in December said home prices in their area are expected to decline during the next recession. March’s numbers represent a steep increase to 44%.
“It’s easy to become fearful when it feels like a recession is imminent, but it’s important to remember what has actually happened in past recessions,” said Redfin Chief Economist Daryl Fairweather.
“Home prices declined substantially during the Great Recession, which started with a housing crash, but throughout the 2001 recession home prices actually rose due to a nascent housing bubble and a shift in investment dollars from the stock market into real estate. It’s perfectly reasonable to expect that a 2020 recession won’t stop home prices from rising, since the supply of homes for sale is so constricted and mortgage rates are at all-time lows.”