Sales of new
single-family houses in February 2021 were at a seasonally adjusted annual rate
(SAAR) of 775,000 units (875,000 expected).
This is 18.2% (±13.9%) below the revised January rate of 948,000 (originally
923,000 units), but 8.2% (±21.7%)* above the February 2020 SAAR of 716,000
units; the not-seasonally adjusted (NSA) year-over-year comparison (shown in
the table above) was +1.6%. For longer-term perspectives, NSA sales were 44.2%
below the “housing bubble” peak but 22.4% above the long-term, pre-2000 average.
The
median sales price of new houses sold in February fell ($3,800 or -1.1% MoM) to
$349,400; meanwhile, the average sales price rose to $416,000 ($5,600 or +1.4%
MoM). Starter homes (defined here as those priced below $200,000) comprised 3.8%
of the total sold, down from the year-earlier 11.1%; prior to the Great
Recession starter homes represented as much as 61% of total new-home sales.
Homes priced below $150,000 were less than 1% of sales, down from 1.1% a year
earlier.
* 90% confidence interval includes zero. The Census Bureau does not have sufficient statistical evidence to conclude that the actual change is different from zero.
As mentioned in our post about housing permits, starts and completions in February, single-unit completions increased by 28,000 units (+2.8%). Because sales (-173,000 units; -18.2%) fell while completions rose, inventory for sale expanded in both absolute (+8,000 units) and months-of-inventory (+1.0 month) terms.
Existing home sales slumped in February (440,000 units or -6.6%), to a SAAR of 6.22 million units (6.500 million expected). Inventory of existing homes for sale was unchanged in absolute terms but nudged higher (0.1 month) in months-of-inventory terms. Because resales fell proportionally more slowly than new-home sales, the share of total sales comprised of new homes retreated to 11.1%. The median price of previously owned homes sold in February advanced to $313,000 ($9,400 or +3.1% MoM).
Housing
affordability jumped by +15.4 percentage points as the median price of
existing homes for sale in January fell by $5,400 (-1.7% MoM; +14.8 YoY), to $308,300.
Concurrently, Standard
& Poor’s reported that the U.S. National Index in the S&P Case-Shiller
CoreLogic Home Price indices rose at a not-seasonally adjusted monthly change
of +0.8% (+11.2% YoY).
“The
strong price gains that we observed in the last half of 2020 continued into the
first month of the new year. In January 2021, the National Composite Index rose
by 11.2% compared to its year-ago levels,” said Craig
Lazzara, Managing Director and Global Head of Index Investment Strategy at S&P
DJI. “The trend of accelerating prices that began in June 2020 has now reached
its eighth month and is also reflected in the 10- and 20-City Composites (up
10.9% and 11.1%, respectively). The market’s strength is broadly-based: all 20
cities rose, and all 20 cities gained more in the 12 months ended in January
2021 than they had gained in the 12 months ended in December 2020.
“January’s
performance is particularly impressive in historical context. The National
Composite’s 11.2% gain is the highest recorded since February 2006, just one
month shy of 15 years ago. In more than 30 years of S&P CoreLogic
Case-Shiller data, January’s year-over-year change is comfortably in the top decile.
That strength is reflected across all 20 cities. January’s price gains in every
city are above that city’s median level, and rank in the top quartile of all
reports in 18 cities.
“January’s
data remain consistent with the view that COVID has encouraged potential buyers
to move from urban apartments to suburban homes. This demand may represent
buyers who accelerated purchases that would have happened anyway over the next
several years. Alternatively, there may have been a secular change in
preferences, leading to a shift in the demand curve for housing. Future data
will be required to analyze this question.
“Phoenix’s 15.8% increase led all cities for the 20th consecutive month, with Seattle (+14.3%) and San Diego (+14.2%) close behind. Although prices were strongest in the West (+11.7%), gains were impressive in every region.”
The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purpose of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.
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