New-home sales shoot up 6.1%, hitting fastest pace since July
Americans responded to higher mortgage rates by snapping up new homes in February at the fastest pace since July.
New-home sales rose 6.1 percent month-over-month to a seasonally adjusted annual rate of 592,000, the Commerce Department said Thursday. That sales pace is nearly 13 percent higher than February of last year, a positive sign for the housing market that demand is robust at the start of the spring home-buying season.
Healthy job growth and a recovering economy have pushed up interest in new homes, while the prospect of rising mortgage rates since the November presidential election may have pulled some sales forward.
An exceptionally warm February also likely helped fuel sales.
“Sales were likely boosted by the much warmer-thanusual weather last month, which made visiting newhome 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 percent 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, fixedrate home loans this week was 4.23 percent. That represents a slight decline from the prior week, but it’s significantly higher than the 3.65 percent average last year.
In the paper released Thursday, Case and Deaton draw a clearer relationship between rising death rates and changes in the job market since the 1970s. They find that men without college degrees are less likely to receive rising incomes over time, a trend “consistent with men moving to lower and lower skilled jobs.”
Other research has found that Americans with only high school diplomas are less likely to get married or purchase a home and more likely to get divorced if they do marry.
“It’s not just their careers that have gone down the tubes, but their marriage prospects, their ability to raise children,” said Deaton, who won the Nobel prize in economics in 2015 for his long-standing work on solutions to poverty. “That’s the kind of thing that can lead people to despair.”
It’s not entirely clear why these trends have affected whites much more than they have African-Americans or Hispanics, whose death rates are improving.
Case and Deaton note that many Hispanics are “markedly better off ” than parents or grandparents who were born abroad, enabling a greater sense of optimism. African-Americans, they add, may have become more resilient to economic challenges given their long-standing disadvantages in the job market.
The data is clear, though: In 1999, the death rate for high school-educated whites ages 50 through 54 was 30 percent lower than the death rate for all African-Americans in that age group. By 2015, it was 30 percent higher.
The educational split is also growing. Even while the death rate for whites without a college degree is rising, the rate for whites who are college graduates is falling, Case and Deaton found.
The trends cut across diverse regions of the country, the researchers found. While the worst-hit spots include Appalachian states such as West Virginia and Kentucky, they also include such areas as Maine, Baltimore and eastern Washington state.
Americans with less education are also faring much worse when compared with adults in other countries, Case and Deaton concluded. Death rates in Europe for people with limited education are falling — and in most countries, they’re falling faster than death rates for those with more education.
For those reasons, Case and Deaton dispute the notion that government disability benefit programs are responsible for some of these problems by enabling more Americans to stop working. Social welfare programs in Europe are typically more generous yet haven’t caused a rise in death rates.
Given the long-running nature of these trends, many of which stem from the 1970s, reversing them could take years, Case and Deaton write. But there are immediate steps that could be taken, Deaton said. Routine prescriptions for opioids should be cut back.
And, “Europe has a much better safety net than we do, and they’re not seeing the same sort of problems as we are,” he said.