Sharply Lower New Home Sales in February Due to High Mortgage Rates

Sales of new homes dropped sharply in February, especially in the Northeast and Midwest, due to high mortgage rates making purchases less affordable.

The national decline was 0.3%, with the Northeast down 31.5% and the Midwest down 2.4%. The South and West saw increases.

Prices also fell in February to the lowest level since June 2021, with the median price of a single-family home dropping over $14,000 to about $400,000.

Mortgage rates hit 8% last fall but expectations of Fed rate cuts brought them down, spurring existing home sales up 9.5% in February despite higher rates.

Rates have risen again recently so new home sales could remain weak in coming months, but are forecast to fall by year-end, which may reignite the market.