Decline in Rates Helps New Home Sales to Edge Higher in February
New home sales edged higher in February, brought on by a slight decline in mortgage rates and limited existing inventory, even as housing affordability challenges continue to act as a strong headwind on the market.
“Sales of newly built, single-family homes in February increased 1.8% to a 676,000 seasonally adjusted annual rate from a revised January number, according to newly released data from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau,” stated National Association of Home Builders (NAHB) Chief Economist Robert Dietz in an Eye On Housing article. “The pace of new home sales in February was up 5.1% compared to a year earlier.”
According to the Eye On Housing article, New home sales have been roughly flat thus far in 2025, as ongoing limited inventory of existing homes in many markets continues to support the need for new homes. Lower mortgage rates helped to lift demand in February, despite other near-term risks such as tariff issues and affordability concerns.
A new home sale occurs when a sales contract is signed, or a deposit is accepted. The home can be in any stage of construction: not yet started, under construction or completed. In addition to adjusting for seasonal effects, the February reading of 676,000 units is the number of homes that would sell if this pace continued for the next 12 months.
