February new home sales rise 1.1%, driven by 8.1% sales in the West
Yahoo Finance’s Dani Romero joins the Live show to discuss February home sales data and homebuyer confidence amid turmoil across the U.S. banking system.
JARED BLIKRE: US new home sales, they rose 1.1% in February to an annual rate of 640,000. What does this mean for the state of the housing market? Here to break it all down is Yahoo Finance's Dani Romero. Dani, what are we making of these latest figures today?
DANI ROMERO: So like you said, sales of newly built homes did get that bounce in February, really signaling to the market that it's going to be gaining back its footing. So if we take a look at that data that we got out this morning regionally, the West had the most new homes sold. And compare that to the Northeast, it really took a hit. It's down 40%. The South is still doing well. And to put it into perspective, if we look at the West, for example, San Francisco, home prices, home values, have drastically fallen there due to the fact that the pandemic really caused this massive exodus of residents to leave that area.
But not only that, tech layoffs have also impacted that region as well. But another part of this story, if we look at the report as well, is the fact that inventory levels for new homes has also-- it's still down. It's down about 1.2%. In that same report, the number of homes sold and are about to start construction rose to the highest level. And to give you some insight on the homebuilder perspective, last week, we heard from the homebuilder company Lennar. They said that they are betting on the fact that there has been a drop in housing starts and building permits. And because of that, they say that there's going to be more availability for labor and materials, which will allow them to really increase the pace for their new homes.
So that's just kind of give you a little bit of perspective on the homebuilder side. But another thing, too, under this whole backdrop, mortgage rates have also been on the downswing, really fueling home buying activity, which we've obviously seen, even under these current banking fallouts.
JARED BLIKRE: Yeah, so it's great mortgage rates are coming down. But at the end of the day, it comes to confidence in the banking system. Confidence runs both ways. As a lender, as a bank, you want to have confidence in the ability to make those funds available. And then as the lendee, the person who is borrowing the funds, well, you need a bank to be able to do that. I'm just wondering, how has the recent bank turmoil kind of influenced the housing market?
DANI ROMERO: Well, buyers are still confident, even under the current circumstances that we are dealing with in the banking sector. KB Home said in their earnings call yesterday that they said buyers are still confident, and they haven't seen any changes when it comes to tighter lending rules or even changes to their underwriting when it comes to their home loans.
But another perspective for home buyers is that they're still dealing with impacts. I mean, they're putting down less for a down payment because of these higher costs. Mortgage rates are still double than what they were during the pandemic frenzy that we saw, right? So costs are still high for home buyers. And so that is also into the mix of everything that is going on, especially now with the whole banking sector, the turmoil there.
JARED BLIKRE: Yeah, a couple of surprises there. Really appreciate that report, Dani Romero.