New home contracts in February were 16.4% stronger than last year and 8.1% higher than two years ago when adjusting for supply and seasonality, according to the Meyers Research New Home Pending Sales Index (PSI) released Friday. February’s data captures the demand for new homes heading into the increased period of uncertainty around COVID-19.
The Index came in at 122.7 for February, up 3.6% from January.
“Consumers were home shopping at cycle-highs in February,” said Ali Wolf, chief economist at Meyers Research. “Low mortgage rates and beating the spring selling season rush were two main contributors to the burst of action.”
However, Wolf continued, “The February data captures housing activity ahead of the increased uncertainty around COVID-19. With containment measures increasing by the day, traffic in the new home market is expected to slow in the coming weeks. Even still, the recent trend for housing captures strong demand that will likely rebound quickly when the coronavirus recedes.”
Among the findings in this month’s index:
- Eight of the 10 key markets grew on a month-over-month basis, led by Atlanta.
- New home pending sales in Phoenix are up a strong 21.0% compared to two years ago, which highlights the strength of the market heading into March, the start of the particularly uncertain period brought on by COVID-19.
- Houston, a market vulnerable to the recent dramatic drop in oil prices, was experiencing robust housing demand last month, up 12.1% year-over-year and 8.5% compared to February 2018.
- The strong annual clip for Los Angeles and San Francisco is less robust when put in context. Both markets are lower compared to two years ago, with Los Angeles sales 11.7% below February 2018 and San Francisco down 22.1%.
