U.S. new-home sales pick up in February

The numbers: New-home sales ran at a 618,000 seasonally adjusted annual rate in February, the Friday.

What happened: Sales of newly-constructed homes were little changed in February, with a 0.6% decline compared the previous month, but January’s tally was revised up heftily. The February selling pace was 0.5% higher than a year ago.

The MarketWatch consensus was for a 630,000 pace.

The government’s data on new-home construction and sales are erratic and often heavily revised. Despite the month-to-month choppiness, the trend is up: full-year 2017 new-home sales were 9.4% higher than in 2016, and for the first two months of 2018, sales are 2.2% higher than the same period last year.

The median sales price in February was $326,800, nearly 10% higher than a year ago. At the current pace of sales, it would take 5.9 months to exhaust available inventory, a sign of a roughly balanced market.

The big picture: 2017 was a good year for builders: sales were strong, demand remained hot, and tax cuts were expected to boost their bottom lines. Shares of publicly-traded builders like PulteGroup, Inc.   and KB Home  surged over the past 12 months, but have reversed those gains in the first months of 2018 as Washington policies like tariffs

An lost ground in March for the third month in a row.

What they’re saying: “There aren’t a heck of a lot of details in this volatile report,” said BMO’s Jennifer Lee after the data was released. “Inventories continued to increase and are now 16.0% above a year ago. The months’ supply inched up to 5.9, the highest in half a year. It remains tight but at least there is a bit of relief in the pipeline. Just a bit.”

“We’re assuming the 60-basis point rise in benchmark mortgage rates since September’s sustained low is dampening demand, though it’s hard to expect a serious decline in housing market activity, given the strength of the labor market,” Pantheon Macro’s Ian Shepherdson wrote after the National Association of Home Builders released its report. “Still, we have to scale back our hopes for a strong spring market.”