WASHINGTON – The Commerce Department reports February sales of new homes Tuesday at 10 a.m. Eastern.
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SLOWER SALES: Economists expect a 2.3 percent drop in new-home sales to a seasonally adjusted annual rate of 470,000, according to a survey by data the firm FactSet. Newly built homes are selling at a faster clip than last year, yet the pace remains sluggish by historical standards. The sales rate is at roughly a third of the pre-recession peak of 1.28 million in 2005.
STALLED MARKET: Real estate sales have been stuck in a rut, despite historically low mortgage rates and a sharp, yearlong upswing in hiring. Fierce winter storms have disrupted purchases of new homes, while builders have pulled back on the pace of single-family housing starts. Sales of existing homes in the first two months of 2015 are running behind the weak pace set last year, according to the National Association of Realtors.
A barrage of snow storms stopped homebuilding in February. Construction sites were shuttered, causing a rise in unemployment benefits. Buyer traffic slowed, according to an industry survey for the the National Association of Home Builders/Wells Fargo index.
Housing starts plummeted a seasonally adjusted 17 percent from January, with the biggest drops coming in the snowbound Northeast and Midwest, the Commerce Department reported last week.
Builders also seem more focused on the rental market, as high prices have cut into the pool of potential buyers. Approved permits in February to start construction on single-family houses fell to their lower annual rate in eight months, while permits for apartments surged to a 10-month high.
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Market fundamentals have amplified the disturbances from the weather.
Too few existing homes are being listed for sale, with an available supply of just 4.6 months compared to a historic average of around 6 months, the Realtors said Monday. The shortage of listings has caused prices of existing homes to climb 7.5 percent over the past year to a median of $202,600, pricing out many would-be buyers who lack the income needed to save for a down payment.
Because of limited supply and rising prices, existing homes sold at annual pace of 4.88 million homes in February, slightly below last year's pace of 4.93 million.
Still, historically low mortgage rates and rock solid job growth has raised expectations among many economists of home sales improving with the weather.
Over the past 12 months, employers have been adding roughly an average of about 275,000 new jobs each month, as the unemployment rate has fallen to 5.5 percent from 6.7 percent, according to the Labor Department. The hiring has increased the total number of paychecks in the economy and the potential number of homebuyers.
Average 30-year fixed rates were 3.78 percent last week, according to the mortgage giant Freddie Mac. That average has plunged from a 52-week high of 4.41 percent, which should help to make housing more affordable.