U.S. new home sales increased sharply for the second consecutive month in February, an indication that growing demand and a pickup in construction activity could help propel a strong spring selling season for this segment of the market.
Purchases of newly built, single-family houses, which account for a small share of overall U.S. home sales, jumped 6.1% from January to a seasonally adjusted annual rate 592,000 last month, the Commerce Department said Thursday. That marked the second-strongest month since the housing-market expansion began in 2012.
Economists surveyed by The Wall Street Journal expected new home sales to increase by 1.4% to 563,000 sales.
“Builders are seeing strong traffic,” said Brad Hunter, chief economist at HomeAdvisor, a home-improvement website. “We are expecting strong sales going into the spring.”
The data were clouded by a margin of error of 17 percentage points, much larger than the reported increase.
Still, momentum appears to be building in the market. New home sales increased in January by 3.7% compared with a month earlier.
February sales jumped by a substantial 12.8% compared with the same month a year ago, according to the Commerce Department.
In a sign that builders are responding to demand, the number of homes for sale at the end of February rose to the highest level since July 2009. At the current sales pace, that is enough supply for 5.4 months, below the six-month level that many economists say is indicative of a balanced market.
The median sale price for a newly built home fell slightly in February to $296,200.
“The pickup in sales coupled with low inventories suggests that single-family starts will rise further in coming months, as home builders attempt to meet increasing demand,” said David Berson, chief economist at Nationwide Insurance.
John Burns, chief executive of John Burns Real Estate Consulting, said the home builders his company surveys reported a 14% increase in sales in February compared with last year. He said expectations for the full year call for roughly 7% sales growth compared with last year.
Mr. Burns said builders got a boost from buyers looking to beat rising interest rates, but that is likely to last only a couple of months.
“We’re having a good spring but not some hockey stick recovery,” he said.
Economists expect new-home sales to continue to increase this year as builders step up construction of single-family homes and more first-time buyers enter the starter-home market. Single-family housing starts rose to a 10-year high in February, thanks to a strengthening economy and unseasonably warm weather.
Still, the housing market picture isn’t entirely rosy. Purchases of previously owned homes, which account for the vast majority of the market, decreased by 3.7% in February from a month earlier, the National Association of Realtors said Wednesday. Economists said rising prices and mortgage rates, along with a shortage of inventory, are keeping many first-time buyers out of the market.
Rates for a 30-year mortgage averaged 4.23% this week, according to mortgage company Freddie Mac, down from 4.3% a week earlier but up from about 3.5% in November.