New home sales unexpectedly fell, tumbling 16.9% month-over-month (m/m) in February to a record low annual rate of 250,000 units, below the 290,000 rate forecasted by economists surveyed by Bloomberg, but January's figure was upwardly revised by 17,000 to a 301,000 annual unit rate. The median home price fell 8.9% y/y and dropped 13.9% m/m to $202,100. Inventory of new homes for sale fell to 186,000 units, representing 8.9 months of supply at the current sales rate, up from 7.4 months in January. February's surprising drop was paced by a 57.1% tumble in the Northeast.
New home sales are considered a timelier indicator of conditions in the housing market than existing home sales-which fell more than forecasted on Monday-as they are based on signings instead of closings. So the report dampened the outlook for avoiding a double dip in the housing sector and the start to the spring selling season. The sharp drops in prices for new homes illustrates the rising competition from the existing home front amid rising foreclosures and tight credit conditions that have increased the amount of all-cash buyers, which both are putting downward pressure on the values sellers can demand.