(Bloomberg). — February saw a decline in sales of U.S.-based homes for the second consecutive month. This suggests that rising mortgage rates and high prices may have kept potential buyers away.

After a January downwardly revised 788,000, single-family home purchases fell to an annualized 772,000 pace. Wednesday’s government data revealed that this was after a February low of 788,000. According to a Bloomberg survey, economists expected a rate of 810,000. 

Low sales suggest buyers are avoiding the market because of rising mortgage rates and high prices. This is despite the Federal Reserve’s tightening policy. A recent report showed a measure of homebuilders’ sales expectations for the next six months slumped in March to the lowest since June 2020 amid growing concerns over the combination of rising construction costs and higher interest rates.

“We recognize that interest rates are rising and inflation is a legitimate threat,” Stuart Miller, executive chairman of Lennar Corp (NYSE :)., stated this on an earnings conference call last week. The homebuilder still reported higher-than-expected quarterly orders, and increased its forecasts based on the expectation that demand will outweigh supply.

According to the Census Bureau and Department of Housing and Urban Development’s new-home sales report for February, the median sale price of a home went up 10.7% from last year, and now stands at $400,600. 

The number of homes sold during the month and awaiting the start of construction — a measure of backlogs — rose from January to 209,000, Wednesday’s report showed.

At the end February there were more than 407,000 homes on the market, the largest number of new properties since August 2008. But, 91% of those were under construction, or still in the planning stages. The current pace of sales would mean that it will take 6.3 months before all the homes are sold, which is a significant improvement on the 4.5 month period one year earlier.

Sales rose regionally in the Northeast, Midwest and West while they fell in South and West.

About 10% of new-home sales are made in the current market. Contracts are signed to calculate these purchases. This is a more accurate indicator than buying previously owned homes. Contracts close are when they are calculated. According to separate data, sales of those homes fell by six months in February according to separate figures.

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