WASHINGTON(Reuters) - Sales of new U.S. single-family homes unexpectedly fell for a third straight month in February, weighed down by steep declines in the Midwest and West.
The Commerce Department said on Friday new home sales dropped 0.6 percent to a seasonally adjusted annual rate of 618,000 units last month. January's sales pace was revised up to 622,000 units from the previously reported 593,000 units.
Economists polled by Reuters had forecast that new home sales, which account for 10 percent of housing market sales, would rise 4.4 percent to a pace of 623,000 units last month. New home sales are drawn from permits and tend to be volatile on a month-to-month basis.
They rose 0.5 percent from a year ago. Sales decreased 3.7 percent in the Midwest and 17.6 percent in the West, which has experienced rapid price growth amid a shortage of homes for sale. They rebounded 19.4 percent in the Northeast and 9.0 percent in the South, which accounts for the bulk of new home sales.
The housing market has slowed in recent months as an acute shortage of homes, especially on the lower end of the market, squeezes sales while pushing up prices. Rising mortgage rates could make buying a home even less affordable for first-time buyers, who have been largely priced out of the market.
The median new house price was $326,800, a 9.7 percent increase from a year ago. The 30-year fixed mortgage rate is hovering at a four-year high of 4.45 percent, according to mortgage finance agency Freddie Mac. In contrast, annual wage growth has been stuck below 3 percent despite the unemployment rate dropping to a 17-year low of 4.1 percent.
In February, there were 305,000 new homes on the market, an increase of 2.0 percent and the highest level since March 2009. The stock of new homes still remains well below its peak during the housing market bubble in 2006.
At February's sales pace it would take 5.9 months to clear the supply of houses on the market, the most since August 2017 and up from 5.8 months in January. About two-thirds of the houses sold last month were either under construction or yet to be built.