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Contracts for new home sales expanded by 6.1% in February, according to estimates from the joint data release of HUD and the Census Bureau. The growth in sales continues along a positive trend for the market, which is supported by solid job growth, improving household formations, continuing favorable housing affordability conditions, and tight existing home inventory. The seasonally adjusted annual pace for February new single-family home sales was 592,000. This is 6.1% better than January and a 12.8% gain over a year ago.

Existing home sales, as reported by the National Association of Realtors (NAR), reversed a January gain and decreased 3.7% in February. At the current sales rate, the February unsold inventory represents a 3.8-month supply, compared to a 3.5-month supply in January. February existing sales were up 5.4% from the same month a year ago, and reached a seasonally adjusted rate of 5.48 million compared to 5.69 million in January. Total existing home sales include single-family homes, townhomes, condominiums and co-ops. Existing sales increased 1.3% in the South, but declined by 3.1% in the West, 7.0% in the Midwest and 13.8% in the Northeast. Year-over-year, all regions advanced, ranging from 9.6% in the West to 1.5% in the Northeast.

The count of unfilled jobs in the overall construction sector declined recently, as residential construction employment accelerated in the last three months. According to the BLS Job Openings and Labor Turnover Survey (JOLTS) and NAHB analysis, the number of open construction sector jobs (on a seasonally adjusted basis) came in at 148,000 in December. The cycle high was 225,000 set in July. The open position rate (job openings as a percent of total employment) for December was 2.2%.

For the country as a whole, the NAHB/First American Leadings Markets Index (LMI), released today, rose to .99 in the fourth quarter of 2016, .01 point higher than its level in the third quarter of 2016, .98, and .05 point higher than its level from one year ago, .94. The LMI is now .21 point above its low of .78 reached in March 2012. The index uses single-family housing permits, employment, and home prices to measure proximity to a normal economic and housing market. The index is calculated for both the entire country and for 337 local markets, metropolitan statistical areas (MSAs).

Recent data from several sources show that home buyers’ desire for large homes (of at least 2,000 square feet) is easier to satisfy in the new housing stock than among existing homes. To be more precise, 51 percent of home buyers want homes with more than 2,000 square feet of living space. Only 41 percent of existing—but 70 percent of new—single-family homes are of this size. Similarly, 44 percent of buyers want homes with more than two bathrooms. Again, this falls between the 31 percent of existing—and 68 percent of new—single-family homes that have more than two full baths. In other words, new construction is addressing a substantial demand for homes with over 2,000 square feet of space and more than two bathrooms, which tend to be under-represented in the stock of existing homes. And while open floor plans are popular among home buyers, the design of a new home tends to be even more open.