New home sales in the U.S. unexpectedly extended the previous month’s sharp pullback in the month of February, according to a report released by the Commerce Department on Wednesday.
The report showed new home sales slumped by 2.0 percent to an annual rate of 772,000 in February after plunging by 8.4 percent to a revised rate of 788,000 in January.
The continued decrease surprised economists, who had expected new home sales to jump by 1.1 percent to a rate of 810,000 from the 801,000 originally reported for the previous month.
With the unexpected drop, new home sales continued to give back ground after reaching their highest annual rate since last March in December.
“We expect new home sales to lose more momentum as we move further into 2022,” said Nancy Vanden Houten, Lead U.S. Economist at Oxford Economics.
She added, “Demand may remain strong, but high home prices and the spike in mortgage rates since the end of 2021 – the most rapid since 1994 – will price some buyers out of the market.”
New home sales in the West led the way lower in February, plummeting by 13.0 percent to an annual rate of 194,000, while new home sales in the South slid by 1.7 percent to a rate of 451,000.
Meanwhile, the report showed new home sales in the Midwest surged by 6.3 percent to a rate of 84,000, and new home sales in the Northeast skyrocketed by 59.3 percent to a rate of 43,000.
The Commerce Department also said the median sales price of new houses sold in February was $400,600, down 6.3 percent from $427,400 in January but up 10.7 percent from $362,000 a year ago.
The seasonally-adjusted estimate of new houses for sale climbed to 407,000 in February from 398,000 in January, reaching the highest level since August 2008.
The number of new homes for sale represents 6.3 months of supply at the current sales rate, up from 6.1 months in January.
Last Friday, the National Association of Realtors released a separate report showing a sharp pullback in U.S. existing home sales in the month of February.
NAR said existing home sales plunged by 7.2 percent to an annual rate of 6.02 million in February after surging by 6.6 percent to a revised rate of 6.49 million in January.
Economists had expected existing home sales to tumble by 6.2 percent to a rate of 6.10 million from the 6.50 million originally reported for the previous month.
The steeper than expected pullback came after existing home sales reached their highest annual rate in a year in January.