Industry News

Drop in February new-home sales overstated?

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Most of the recent downturn in new-home sales may have been a statistical anomaly caused by builders reselling homes that buyers backed out of, according to the latest economic outlook report from the chief economist at Freddie Mac. New-home sales dropped 4 percent in February, clouding the prospects for a housing market recovery implied by a 4 percent gain in sales of existing homes and a 5 percent increase in sales of existing condos and co-ops. But the drop in new-home sales may have been misleading, because resales of homes with previously cancelled sales contracts are not reported as new-home sales or deducted from inventories. Calibrating the impact of the resale of homes with previously cancelled contracts "suggests such sales may account for most of the recent reported downturn in sales, which bodes well for a gradual recovery in coming months," the Freddie Mac Chief Economist Frank Nothaft wrote. With rates on 30-year fixed-rate mortgages holding steady at a little more than 6...