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New Home Sales Retreat After January Surge

Updated to include comments from the National Association of Home Builders.

New single-family home sales weakened last month, bringing market figures down after a surge reported in January.

According to reports released Tuesday by the Census Bureau and HUD, new home sales in February ran at a seasonally adjusted annual rate of 440,000, down 3.3 percent from the revised January rate of 455,000 (originally recorded at 468,000). It was the weakest sales pace since September 2013.

Compared to February 2013, last month’s sales rate was down by about 5,000 (1.1 percent).

Three out of the country’s four Census regions posted lower sales compared to January: The Northeast (down 32.4 percent to a rate of 23,000), the South (down 1.5 percent to 255,000), and the West (down 15.9 percent to 95,000). The Midwest, meanwhile, recorded a sales pace of 67,000, up 36.7 percent month-over-month.

Despite the national decrease, some analysts found stats worth celebrating in the latest report.

“New home sales are much the same as they were this point a year ago, despite the rise in house prices,” said Paul Diggle, property economist for research firm Capital Economics.

Indeed, the average sales price of new homes sold in February was $317,500, up $5,000 over the year. The median price, however, was down to $261,800 from $265,100 a year prior.

With job growth accelerating, Capital Economics expects sales to pick up again “before too long.”

Also promising was a slight bump in inventory, with the number of new homes for sale ending the month at an estimated 189,000—"indicating [builders] still anticipate a relatively strong spring buying season," said Kevin Kelly, chairman of the National Association of Home Builders (NAHB).

NAHB chief economist David Crowe agreed, adding that weather played a role in last month's softness.

“We still expect 2014 will be a strong year for housing,” Crowe said. “The first two-month average of 2014 is exactly in line with where 2013 left off. If not for the unusual weather, we would easily be ahead of last year’s pace. We also continue to see household formations and pent-up demand driving sales forward.”    

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