Sales of new U.S. single-family homes fell more than expected in February after hefty gains the previous month, but steady gains in home prices suggested the housing market recovery remains intact.
The Commerce Department said on Tuesday sales dropped 4.6 percent to a seasonally adjusted annual rate of 411,000 units. Last month's decline followed a 13.1 percent jump in January.
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Though January's sales pace was revised down to 431,000 units, it was still the highest level since September 2008.
Economists polled by Reuters had expected sales to fall to 422,000-unit rate last month.
Compared with February 2012, sales were up 12.3 percent, indicating the housing market recovery was on course. Sales are being hampered by a lack of supply of homes on the market in some major parts of the country.
While the inventory of new homes on the market rose 1.3 percent to 152,000 units, it was not far from record lows.
According to recent government data, groundbreaking for single-family homes intended for sale continues to lag sales. Economists at Moody's' Analytics warn that builders could struggle to keep up with demand, which could cause the new home market recovery to be uneven over the next several months.
The home resales market is also experiencing lean inventories. The recovery in the sector is being supported by record-low mortgage rates, which have been held down by the Federal Reserve's very accommodative monetary policy stance.
New homes account for about 8 percent of the overall market.
At February's sales pace, it would take 4.4 months to clear the houses on the market, up from 4.2 months in December.
A supply of 6.0 months is normally considered as a healthy balance between supply and demand. The low months' supply should drive up new home prices.
The median sales price for a new home increased 3.0 percent to $246,800 and was up 2.9 percent from a year ago.
Sales last month were dragged down by a 13.3 percent plunge in the Northeast and a 9.7 percent fall in the South. Sales only rose in the Midwest, touching the highest level since December 2011.
