The latest release of the New Home Sales data by the US Census Bureau and Department of Housing and Urban Development shows that sales in February were down slightly from the previous month. Despite the drop, the housing market is still in good shape, and will take off as soon as more consumers gain the confidence needed to make the commitment and purchase a house.
The annualized sale of new homes came to 313,000 for February, a 1.6% decline off the revised report of 318,000 for January. While the temporary down tick represents the lowest number since October, it is still 11.4% higher than it was in February 2011. In the long run, the market is looking quite well.
The numbers dropped in part by poor sales in the South and Midwest. These areas represent a large portion of the sales across the country. Despite large gains in the number of sales in the Northeast and West, the overall sales figures still dropped.
As the number of sales declines, the prices continue to rise. For new home sales, the median price was $233,700 in February 2012, a 6.2% increase from 12 months ago.
The outlook for the housing market looks neither good nor bad. While spring and summer often are good months, when the majority of homes are sold, the upcoming months will most likely see little improvement. This is in part due to poor consumer confidence. Energy prices continue to rise, and when there are worries about the economy, people tend to put off major buying decisions. Until the overall outlook starts to feel better, the housing market will continue its slow expansion.
The new home sales data is one of the most important indicators of the economic health. As people gain confidence in their earning ability they will purchase homes. Ripple effects in the economy allow construction companies to hire more laborers, and thus put the money back into the economy. New home sales also drive many other jobs in the trades, as well as major retail stores (after buying a new home people will need appliances, furniture, and other large items). But what it all boils back to is whether or not people are confident enough to make the decision to buy a house.
The data on new home sales is released once per month. The monthly release will give the preliminary report for the preceding month, as well as revising the data for two months ago. The data is collected by the US Census Bureau, and is determined by analyzing the number of contracts signed for the purchase of a new home.