New home sales shot 6.1 percent higher in February to a 592,000 annualized rate that easily beats the Econoday consensus for 565,000 and is near the top estimate of 600,000. Sales appeared to have gotten a boost from builder concessions as the median price fell a monthly 3.9 percent to $296,200 for a year-on-year rate that's suddenly in the negative column at minus 4.9 percent.
Strength is centered in the Midwest where the sales rate surged 21,000 to 89,000 and easily surpassing 11,000 gains for the both the West, at 157,000, and the South at 313,000. Sales in the Northeast fell sharply in yesterday's existing home sales report and are down 9,000 to a very low 33,000 annualized rate in today's report.
Supply of new homes did rise slightly in the month, up 4,000 to 266,000 currently on the market, but relative to sales supply fell to 5.4 months from 5.6 months. Supply has been thin all cycle for new homes and was at 5.5 months in February last year.
Most of the news is good in this report underscored by the average price which, reflecting high-end properties, jumped 9.9 percent in the month for a yearly 11.7 percent gain at $390,400 and a new record. Today's report helps offset weakness in existing home sales and keeps the housing sector on moderately climbing slope.
New home sales looked to be one of the economy's best strengths before fading at year-end and posting a very soft January. New home sales in February are expected to bounce back, to a consensus 565,000 million annualized rate in what would be a very solid 1.8 percent gain from January's 555,000. But this report is notorious for its month-to-month volatility which puts the focus on the 3-month average which, however, has also been fading.