Sales of new U.S. homes climbed 4.9 percent in February, an indication that falling mortgage rates have given a boost to demand from buyers.
The Commerce Department said Friday that new homes sold at a seasonally adjusted annual rate of 667,000 in February, an increase from an upwardly revised 636,000 in January. New-home sales are running 2.8 percent higher through the first two months of 2019 than during the same period last year.
This initial rebound in sales after a weak end to 2018 bodes well for the traditional Spring homebuying season that began this month. Recent gains suggest that the combination of a solid job market and rising wages has encouraged more people to upgrade to a newly built house.
A sharp drop in mortgage rates has eased affordability pressures and aided homebuying. The average 30-year mortgage rate climbed for much of 2018 to roughly 5 percent in November, only to dip to nearly 4 percent this week, according mortgage buyer Freddie Mac.
The median sales price of a new home in February fell 3.6 percent to $315,300.
New-home sales jumped in the Northeast and Midwest in February by more than 20 percent, while posting a more tepid gain of 1.8 percent in the South. Accounting for about 60 percent of new-home sales, the South is the largest U.S. housing market.
Sales were unchanged in the West.
The housing market has also shifted slightly to new construction for entry-level buyers. The proportion of properties sold between the prices of $200,000 and $299,999 was 35 percent in February, up from 31 percent in 2018. This move has corresponded with a downward shift in sales of homes priced above $500,000.