Reluctant buyers caused new home sales to fall 2.7% in February, according to government figures released Monday that analysts attributed to rising mortgage rates and uncertainty over a proposed tax credit for first-time purchases.
But few analysts believe that the housing sector recovery was in any danger of faltering. The industry traditionally leads the economy out of recession.
"The details of the February report . . . indicate that the housing market is strong, despite the decline in sales," said economist Marilyn Schaja of Donaldson, Lufkin & Jenrette Securities Corp. in New York.
"I feel pretty good about the course of the recovery so far," concurred David F. Seiders, an economist with the National Assn. of Home Builders. "It's been erratic, but it's trending up. I'm looking for the market to trend upward for the rest of the year."
Sales totaled 613,000 at a seasonally adjusted annual rate, down from 630,000 a month earlier, according to the report from the departments of Commerce and Housing and Urban Development.
The previously weak Northeast posted the only regional advance. Sales fell in both the Midwest and South and were flat in the West.
The report also revised the strong January sales jump down to 11.1% from 12.9% in the initial estimate last month. Still, it was the steepest advance since sales rose 20.7% in February, 1991, as the housing industry began emerging from the recession.
Analysts had said the January pace could not be sustained, particularly the 50.5% jump in the Midwest.
New-Home Sales Slip S ales of new homes slipped 2.7% in February, the Commerce Department said. The drop in new-home sales followed a revised 11.1% jump in January that was the biggest increase in nearly a year. Housing is crucial to the economy because it fuels activity in other areas as home buyers purchase furniture and other goods and builders stock up on materials. Key factors: While sales slipped month-to-month, the seasonally adjusted annual rate of 613,000 new-home sales last month was 25% higher than the rate in February, 1991, when the industry was just starting to climb out of a slump.
Good signs: The drop was not enough to dampen hopes that housing will help lead the nation to economic recovery. Other recent reports have shown signs of life in the nation's housing industry, as home prices and interest rates have declined. A separate report last week from the National Assn. of Realtors showed sales of existing homes jumped 9.3% in February from January. And earlier this month the government said new-home starts rose 10% last month.
Bad signs: Mortgage rates edged back up in February, which the realtors' association said last week may have forced some buyers to commit before mortgages became more costly. That could be a restraint on future sales increases. "Although, as in all past recoveries, housing will be an engine, this time it's going to be more like a V-4 than a V-8," said Daryl Delano, an economist with Cahner Economics Inc. in Newton, Mass. "It's going to help the recovery, but the housing recovery in and of itself won't give us as much lift as we'd like to see."
New Home Sales Seasonally adjusted annual rate, thousands of units Feb., '92: 613 Jan., '92: 630 Feb., '91: 488Source: Commerce Department