March 25, 2014 10:05 AM, EDT
Sales of New Homes Fall to Five-Month Low

Purchases of new homes in the United States fell in February to the lowest level in five months, a sign the industry may take time to pick up after inclement weather damped demand earlier in the year.

Sales declined 3.3% to a 440,000 annualized pace, after a 455,000 rate in the prior month that was the strongest in a year, figures from the U.S. Commerce Department showed today. The median forecast of 77 economists surveyed by Bloomberg News called for 445,000.

Unusually frigid temperatures added to restraints, including rising mortgage rates, higher property values and a lack of supply that kept prospective buyers away from the market for new and existing properties.

“A lot of the weakness is due to the weather, and that effect should be getting over soon,” David Sloan, a senior economist at 4cast Inc. in New York, said before the report. “We expect a moderate improvement in demand. Affordability will still be decent. The overall picture is positive, but I don’t want to suggest a surge in sales all of a sudden.”

Economists’ estimates ranged from 406,000 to 506,000. The reading for the prior month was revised down from a previously reported 468,000.

Purchases dropped in three of the four regions, led by a 32.4% slump in the Northeast. The West decreased 15.9%, and the South fell 1.5%. Midwest demand jumped 36.7% to the highest level since May 2013 after dropping almost 20 percent the prior month.