Sales of new homes in the United States plunged in February, government data said on Tuesday, as bad winter weather chilled the hot housing market.
Sales decreased 18.2 percent from January's upwardly revised rate to a seasonally adjusted rate of 775,000 annualized, much worse than analysts had expected and the worst reading since May of last year.
Real estate has been in high demand even as the Covid-19 pandemic harmed the wider US economy, and analysts said the sharp decline in sales last month was partly due to tightening inventory and rising prices that kept some buyers away.
But the decline was sharpened by poor winter weather, which also caused drops in homebuilding and existing home sales.
"Winter weather probably depressed sales as sales fell sharply in all regions. We look for new home sales to moderate over the course of 2021 as high prices crimp affordability, but still look for sales to be up about four percent for the year," Nancy Vanden Houten of Oxford Economics said.
Sales fell in all regions, with the Midwest seeing the biggest drop of 37.5 percent.
Seasonally adjusted inventory increased slightly to a 4.8 month supply, its largest since May of last year.
The median sales price of new homes declined slightly from January to $349,400.
Ian Shepherdson of Pantheon Macroeconomics predicted March would see a mild rebound in sales as the storm's effect receded, but warned the housing market was set for a sustained cooling amid scarce supply.
"The storm is not the only story here; falling mortgage demand means we would have expected a clear drop in sales even without the snow. A combination of rising interest rates, Covid fears, and tighter lending standards is depressing demand," he said in a note.