New-Home Sales Surged in February to 11-Month High, Consumer Spending Lags
Sales of newly built single-family homes surged in February to a seasonally adjusted annual rate of 667,000, the Commerce Department reported Friday. That 4.9 percent increase is the highest level this category of home sales has reached since March 2018.
The rate of sales rose in all regions in the U.S. except in the West, where sales were unchanged from January. Sales of new homes in the South hit their highest level in more than a decade.
The report, which was delayed by the government shutdown, also said the median sales price fell 3.6 percent from the previous year to $315,300.
The supply of homes at the current sales rate decreased to 6.1 months, the lowest since June, and is down from 6.5 months in January.
This statistic boils down to the ratio of houses for sale to houses sold. It provides an indication of the size of the for-sale inventory in relation to the number of houses currently being sold.
According to the U.S. Census Bureau and U.S. Department of Housing and Urban Development, the entities that most often use these figures, the “months’ supply” indicates how long the current for-sale inventory would last given the current sales rate if no additional new houses were built.
In a separate report, the Commerce Department said Friday that U.S. consumer spending edged up just 0.1 percent in January, while incomes advanced a modest 0.2 percent in February.
The government said the weak gain in consumer spending followed a 0.6 percent plunge in December that marked the biggest one-month drop in more than nine years.
The 0.2 percent rise in incomes in February came after a 0.1 percent drop in incomes in January.
The two reports come on the heels of the government revising down its estimate of growth in the fourth quarter of 2018 to 2.2 percent.
A marked and well-documented slowdown in consumer spending, which accounts for 70 percent of economic activity, was given as the reason for the slowdown.
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