So much for the glut of glowy economic news: The housing market remains wobbly as new home sales slipped for the second month in a row, sinking 1.6% in February.
Sales of new properties for single families dipped to an annual rate of 313,000 from January’s 318,000, according to the Commerce Department. That’s the slowest pace since October, and it follows a 5.4% tumble in January.
Across the country, sales were mixed, falling in the South and Midwest but rising in the Northeast and 8% in the West. The data were a constraining cap on a week of promising economic indicators that had included strong auto sales, tumbling jobless claims and surging tourism spending.
The Dow Jones industrial average plunged immediately after the report was released at 10 a.m. EDT but has since recovered.
KB Home, one of the country’s largest home-builders, also released disappointing numbers. Orders in the first quarter fell 8% to 1,197 homes after cancellations spiked to 36% from 29% last year, the Los Angeles company said.
On the West Coast, KB’s orders fell 28% while prices rose 6%; in the Southwest, prices were up 26% as orders dove 30%.
The higher prices helped push overall revenue up 29% year over year to $254.6 million. The company suffered a loss of $45.8 million, or 59 cents per share – narrowing the $114.5-million loss, or $1.49 per share, from the same quarter last year but still losing more than many analysts had expected.
KB’s stock seesawed during the day, closing at $10.29, down 95 cents or 8.45%.
But a housing market turnaround is far from a lost cause. The industry seems to be reaching a sort of equilibrium. Compared to last February, new home sales were up 11.4%.
And their prices are at an eight-month high, with the median price of a new property up 6.2% year-over-year to $233,700 in February. That’s despite the large portion of buyers who’ve kept busy picking up discounted homes, cheap foreclosures and previously owned homes, which had the best January-February selling season in five years.
That’s hampered demand for new homes. At the end of February, 150,000 new homes were on the market – an inventory that’ll take 5.8 months to sell. Although the same number were waiting to be sold at January’s end, economists said those would only require 5.7 months to sell.
But even though home-building was down overall last month, ground-breakings for new projects reached a nearly 3.5-year high.
And figures like that have kept the industry from becoming too perturbed: An index from the National Assn. of Home Builders has housing market confidence measuring at a nearly five-month high.
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