WASHINGTON -- New-home sales fell 4.4% in February, and bigger declines are expected in the coming months as the coronavirus puts a major crimp on sales.
The Commerce Department said Tuesday that February sales dropped to a seasonally adjusted annual rate of 765,000 homes, down from a rate of 800,000 homes in January.
The January figure was revised up from an initial estimate of 764,000.
Economists are warning that home sales, along with many other parts of the economy, are expected to take a big hit in the coming months because of the shutdowns that have occurred as the U.S. tries to limit the spread of the coronavirus.
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The report showed that the median price for a home sold in February was $345,900, up more than 6% from a median price of $325,900 in January and up 7.8% from a year earlier.
Housing is set to downshift after the sector enjoyed low lending rates, steady job growth and elevated consumer confidence at the start of the year. Experts are forecasting big declines for the overall economy, with a wave of layoffs already starting because of the big hit the economy has taken during the outbreak.
Larry Kudlow, head of the president's National Economic Council, told reporters at the White House on Tuesday that overall economic growth was "going to be rough" in the coming months. But he said the support that the economic stimulus package that Congress is working on means "we'll be setting the stage for a good rebound in the second half of the year."
Chris Rupkey, chief financial economist at MUFG in New York, said, "New-home sales will likely plummet in the next few months not because of a recession per se, but the reality is the public has been told to stay in their homes."
By region of the country, home sales in February surged 38.9% in the Northeast, a huge gain that was attributed to warmer-than-usual weather. Sales were up 1% in the South, fell 17.2% in the West and were down 7.3% in the Midwest.
The number of new homes sold and not yet started rose to 231,000, the second-most since early 2007. Those figures indicate a pipeline for builders that could help keep workers at job sites depending on virus-related restrictions.
The supply of homes at the current selling rate edged up to five months from 4.8 months previously.
The government's data on new-home sales is volatile on a month-to-month basis. Changes in the seasonally adjusted data have a wide margin of error.
Information for this article was contributed by Martin Crutsinger and Darlene Superville of The Associated Press and by Vince Golle of Bloomberg News.
Business on 03/25/2020