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New Home Sales Dip Again in February: Should You Worry?
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The dismal housing data streak continues in the month of February, with sales of newly constructed single-family houses falling from January 2018. This marks the third straight month of decline. Housing starts and building permits also fell 7% and 5.7%, respectively, in the month.
Sales of newly constructed homes, accounting roughly 10% of all U.S. home sales, dropped 0.6% in February from the prior month to a seasonally adjusted annual rate of 622,000 units, per data released on Mar 23 by the Commerce Department. Notably, last month’s figure was affected by sharp declines in the Midwest (3.7%) and West (17.6%) regions.
No Reason to Worry
Despite the month-to-month irregularity, new home sales were up 0.5% year over year. Moreover, figures improved 19.4% in the Northeast and 9% in the South, which accounts for the majority of new home sales.
Moreover, the fall in housing starts is not a threat as single family units, which are of higher importance and indicate a strengthening economy, have improved in February. Building permits, though declining 5.7% on a month-over-month basis, rose 6.5% year over year. Adding to the optimism, existing home sales figure increased 3% in February from January and 1.1% from the year-ago level.
Solid economic growth and job market make us reasonably confident about the industry’s performance. The unemployment rate was unchanged at 4.1% in February, marking a 17-year low. Moreover, a healthy builder’s confidence reading in March is encouraging. Per the latest report of the National Association of Home Builders and Wells Fargo, Housing Market Index reading in the current month is strong at 70.
Importantly, high prices of homes and rising mortgage rates are creating hurdles for buyers. The median sales price of new houses was $326,800 in February, up 9.7% from a year ago. According to mortgage loan company Freddie Mac, the 30-year, conventional, fixed-rate mortgage moved higher for the fifth straight month to 4.33% in February (highest since 4.34% in April 2014) from 4.03% in January.
Nonetheless, a solid U.S. economy accompanied with a healthy labor market is expected to keep the housing market alive.
The Zacks Homebuilding Industry has rallied 21.7% in the past year, comparing favorably with 1.6% rally of the broader market (S&P 500). Moreover, a good industry rank (top 31% of more than 250 industries) supports the growth potential of the stocks.
Again, this industry’s expected earnings per share (EPS) growth rate of 17.9% for three-five years is better than the broader market’s rate of 9.7%.
A few major homebuilders like KB Home (KBH - Free Report) , Lennar Corporation (LEN), D.R. Horton, Inc. (DHI - Free Report) and NVR, Inc. (NVR - Free Report) are well poised on bullish fundamentals of the housing market.
Zacks names 5 companies poised to ride a medical breakthrough that is targeting cures for leukemia, AIDS, muscular dystrophy, hemophilia, and other conditions.
New products in this field are already generating substantial revenue and even more wondrous treatments are in the pipeline. Early investors could realize exceptional profits.
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New Home Sales Dip Again in February: Should You Worry?
The dismal housing data streak continues in the month of February, with sales of newly constructed single-family houses falling from January 2018. This marks the third straight month of decline. Housing starts and building permits also fell 7% and 5.7%, respectively, in the month.
Sales of newly constructed homes, accounting roughly 10% of all U.S. home sales, dropped 0.6% in February from the prior month to a seasonally adjusted annual rate of 622,000 units, per data released on Mar 23 by the Commerce Department. Notably, last month’s figure was affected by sharp declines in the Midwest (3.7%) and West (17.6%) regions.
No Reason to Worry
Despite the month-to-month irregularity, new home sales were up 0.5% year over year. Moreover, figures improved 19.4% in the Northeast and 9% in the South, which accounts for the majority of new home sales.
Moreover, the fall in housing starts is not a threat as single family units, which are of higher importance and indicate a strengthening economy, have improved in February. Building permits, though declining 5.7% on a month-over-month basis, rose 6.5% year over year. Adding to the optimism, existing home sales figure increased 3% in February from January and 1.1% from the year-ago level.
Solid economic growth and job market make us reasonably confident about the industry’s performance. The unemployment rate was unchanged at 4.1% in February, marking a 17-year low. Moreover, a healthy builder’s confidence reading in March is encouraging. Per the latest report of the National Association of Home Builders and Wells Fargo, Housing Market Index reading in the current month is strong at 70.
Importantly, high prices of homes and rising mortgage rates are creating hurdles for buyers. The median sales price of new houses was $326,800 in February, up 9.7% from a year ago. According to mortgage loan company Freddie Mac, the 30-year, conventional, fixed-rate mortgage moved higher for the fifth straight month to 4.33% in February (highest since 4.34% in April 2014) from 4.03% in January.
Nonetheless, a solid U.S. economy accompanied with a healthy labor market is expected to keep the housing market alive.
The Zacks Homebuilding Industry has rallied 21.7% in the past year, comparing favorably with 1.6% rally of the broader market (S&P 500). Moreover, a good industry rank (top 31% of more than 250 industries) supports the growth potential of the stocks.
Again, this industry’s expected earnings per share (EPS) growth rate of 17.9% for three-five years is better than the broader market’s rate of 9.7%.
A few major homebuilders like KB Home (KBH - Free Report) , Lennar Corporation (LEN), D.R. Horton, Inc. (DHI - Free Report) and NVR, Inc. (NVR - Free Report) are well poised on bullish fundamentals of the housing market.
All four stocks carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank(Strong Buy) stocks here..
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Zacks names 5 companies poised to ride a medical breakthrough that is targeting cures for leukemia, AIDS, muscular dystrophy, hemophilia, and other conditions.
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