US new home sales rise despite higher mortgage rates

“Sales were likely boosted by the much warmer-than-usual weather last month, which made visiting new-home construction sites less miserable than usual in February,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics.

Builders have ramped up the construction of new homes, which helps meet strong demand and boosts sales. That could provide a slight lift to the broader economy through construction jobs and the consumer spending linked to home purchases.

But demand for homes is still outpacing the construction gains. There were 266,000 new homes for sale last month, the most since July 2009 — a month after the recession ended — and up nearly 10 per cent from a year earlier.

The median sales price in February of a new home was $296,200, a decline that might reflect that much of the sales last month were in the cheaper Southern markets.

Construction firms are bullish that sales will keep improving, even though they remain well below the heights of the housing boom seen more than a decade ago.

The National Association of Home Builders/Wells Fargo builder sentiment index climbed to 71 this month, the highest reading since June 2005.

Some buyers may be looking to lock-in their purchases out of concern that mortgage rates will rise, possibly hurting affordability.

Mortgage buyer Freddie Mac said Thursday the average rate on 30-year, fixed-rate home loans this week was 4.23 per cent. That represents a slight decline from the prior week, but it’s significantly higher than the 3.65 per cent average last year.

Christopher S. Rugaber And Josh Boak, The Associated Press

by Canadian Press

US new home sales rise despite higher mortgage rates

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