US new home sales rise by most since July

Sales of newly built homes in the US climbed by the most since July last month ahead of the key spring selling season in the housing market.

New home sales rose 6.1 per cent in February to an annualised pace of 592,000, the Census Bureau said on Thursday, topping economists estimates of a 1.6 per cent rise to 564,000, according to economists surveyed by Bloomberg.

January’s figures were revised up to show a 5.3 per cent increase to an annualised pace of 558,000 units.

Inventory continued to remain tight with a 5.4 months supply at the current sales pace. And a regional breakdown showed that sales jumped 30.9 per cent in the Midwest, but fell 21.4 per cent in the Northeast.

This follows a larger than expected drop in sales of previously owned homes, which account for a much larger section of the housing market, in February.

Solid job growth and improving wages have helped support the US housing market even as mortgage rates have started to inch up. However, economists have argued that affordability continues to constrain homebuyers as supply of homes remains tight.