US new-home sales dipped in February, but demand is solid

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US new-home sales dipped in February, but demand is solid
FILE- This Feb. 26, 2018, photo shows a new home are for sale in Mahwah, N.J. On Friday, March 23, the Commerce Department reports on sales of new homes in February. (AP Photo/Seth Wenig, File)

WASHINGTON (AP) — Sales of new U.S. homes slipped 0.6 percent in February, a third straight monthly decline. But year to date, sales are up 2.2 percent in a sign that buyer demand remains solid.

The Commerce Department said Friday that last month’s sales came in at a seasonally adjusted annual rate of 618,000, down from 622,000 in January and 653,000 in December.

Homebuyers at the start of the spring buying season are generally finding higher prices and fewer properties available. Those factors, along with rising mortgage rates, have suggested that home ownership is becoming less affordable. The shortage of existing homes on the market is intensifying competition among would-be buyers of newly built houses.

Last month’s decline came largely from a 17.6 percent drop-off in new homes sold in the West. New-home sales fell in the Midwest but climbed in the Northeast and South. The median sales price of a new home climbed nearly 10 percent from a year ago to ,800.

New homes make up slightly more than 10 percent of homes now being sold. Existing-home sales increased in February to a seasonally adjusted annual rate of 5.54 million, the National Association of Realtors said earlier this week. But the supply on the market has been rapidly vanishing. Listings of existing homes have plunged 8.1 percent over the past year.

Rising borrowing costs could worsen the supply squeeze. Many homeowners are reluctant to upgrade to another home that would require them to take on a mortgage with a higher rate than they now pay.

The average rate this week for a 30-year fixed rate mortgage was 4.45 percent this week, up from an average last year of less than 4 percent, according to mortgage buyer Freddie Mac.