New Home Sales, which measure signed contracts on new homes, rose 1.1% in February to a 640,000-unit annualized pace. This was much stronger than estimates of a 3% decline and marks the third straight month that sales moved higher. However, downside revisions were made to January’s sales figure and sales remain 19% lower than they were in February of last year. The median sales price rose from $426,500 in January to $438,200 in February. Again, this figure is not the same as appreciation but represents the mid-price and can be skewed by the mix of sales among lower-priced and higher-priced homes.

What’s the bottom line? There were 436,000 new homes for sale at the end of February, which equates to an 8.2 months’ supply at the current sales rate. However, only 72,000 were actually completed. The rest were either under construction or not even started, with the latter category spiking from January. This reflects a growing backlog among builders, as the number of completed homes equates to just 1.4 months’ supply, which is well below a balanced market. Alicia Huey, Chair for the National Association of Home Builders, noted that builders report “strong pent-up demand” with many buyers “turning more to the new home market due to a shortage of existing inventory.”