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U.S. new home sales surge to seven-month high in February
March 23, 2017 / 2:02 PM / 9 months ago

U.S. new home sales surge to seven-month high in February

WASHINGTON, March 23 (Reuters) - New U.S. single-family home

FILE PHOTO: A real estate sign advertising a new home for sale is pictured in Vienna, Virginia, U.S. October 20, 2014. REUTERS/Larry Downing/File Photo

sales jumped to a seven-month high in February, suggesting the

housing market recovery continued to gain momentum despite the

challenges of high prices and tight inventories.

The Commerce Department said on Thursday new home sales

increased 6.1 percent to a seasonally adjusted annual rate of

592,000 units last month, the highest level since July 2016.

January’s sales pace was revised up to 558,000 units from

the previously reported 555,000 units. New home sales have now

recouped a sharp drop suffered in December.

Economists polled by Reuters had forecast new home sales,

which account for about 9.7 percent of overall home sales,

gaining 0.7 percent to a rate of 565,000 units last month.

New home sales, which are derived from building permits, are

volatile on a month-to-month basis and subject to large

revisions. Sales were up 12.8 percent compared to February 2016,

showing the housing market’s resilience.

Sales last month were likely partially buoyed by

unseasonably warm weather.

Most economists see a limited impact on housing from higher

mortgage rates because a tightening labor market is improving

employment opportunities for young adults. The market for new

houses is benefiting from a shortage of properties for sale.

A report on Wednesday showed a 3.7 percent drop in sales of

existing homes in February amid tight inventories and rising

house prices. The 30-year fixed mortgage rate is currently

around 4.30 percent.

Last month, new single-family homes sales slumped 21.4

percent in the Northeast region. Sales surged 30.9 percent to

their highest level since November 2007 in the Midwest and

increased 3.6 percent in the South.

They jumped 7.5 percent in the West. The inventory of new

homes on the market increased 1.5 percent to 266,000 units last

month, still less than half of what it was at its peak during

the housing boom in 2006.

At February’s sales pace it would take 5.4 months to clear

the supply of houses on the market, down from 5.6 months in

January.

A six-month supply is viewed as a healthy balance between

supply and demand. The median price for a new home fell 4.9

percent to $296,200 in February from a year ago.

Reporting by Lucia Mutikani; Editing by Paul Simao

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