As we enter the spring home-buying season, hordes of would-be homeowners are ready to go—but there weren't enough new-home sales in the beginning of the year to quell the already strong demand.
Only about 618,000 newly constructed homes were sold in February, according to a joint report by the U.S. Census Bureau and U.S. Department of Housing and Urban Development. That's down 0.6% from January, but up 0.5% from February 2017.
"There is plenty of room for growth," Chief Economist Danielle Hale said in a statement. "More new-home sales are needed to restore balance in the housing market. ... Today, one in every 10 homes sold is a new home, whereas in a normal market they account for one in every seven homes sold."
Currently, there aren't enough homes to go around, particularly at more affordable prices. The median price of newly constructed homes notched up to $326,800. It's up nearly 0.6% from the previous month and almost 9.7% from the same month a year ago.
That's considerably more than existing homes, which cost a median $241,700 in February, according to a recent National Association of Realtors® report. Newly constructed homes cost more than existing ones thanks to high land, labor, and materials costs. They also typically come with the latest designs, finishes, and appliances.
Only about 13% of the newly constructed homes sold in February cost less than $199,999, according to the report. The bulk of them, about 58%, were between $200,000 and $399,999. An additional 12% cost between $400,000 and $499,999, while 17% were priced at $500,000 and up.
The most new homes were sold in the South, where buyers closed on about 338,000 new homes in February. That's a 9% jump from January and a 0.6% bump from February 2017.
The region was followed by the West, where about 164,000 new homes changed hands.
This represented a 17.6% monthly drop, but a 3.1% annual increase.
Next up was the Midwest, with 79,000 sales, down 3.7% from January and 8.1% from the same month a year earlier. The Northeast had the fewest new-home sales, at just 37,000. But that was up 19.4% from the previous month and 8.8% from February 2017.