The Census Bureau reported new home sales for February at a seasonally adjusted annual rate of 618,000. This was slightly below expectations, but January was revised significantly higher so month over month the change was negligible. Compared to last year new home sales in February were up less than one percent.

The median price for a new home contracted (signing of contract, not actually closing) was $326,800 while the average price of a new home last month posted at $376,700. The supply of new homes stood at 5.9 months in February, near the top of the range seen during the past year.

The undeniable reality is that new home prices are relatively UNaffordable for many Americans. This is particularly the case considering average mortgage interest rates are near 3-year highs. Freddie Mac’s weekly average on the 30-year fixed rate mortgage stood at 4.45 percent in the latest survey. It is not surprising to see new home sales flat-line like they have done the past two months.

Unlike many of my real estate industry colleagues, I’m not going to tell you to rush out and buy a home to beat those rising rates. Buying a new home is a big decision, and I prefer the cold hard truth (aka data) rather than scare tactics. The truth of the matter is that home prices have been out of touch for wage growth for several years now. 2018 is shaping up to be a bountiful harvest of consequences for the U.S. real estate market as the truth is finally being revealed.

If you are worried about mortgage interest rates shooting higher, Don’t! While the Federal Reserve and their army of pundits have been busy preaching about the fabulous economic recovery, the data paints a much less flattering picture of the health of U.S. finances. At Wednesday’s FOMC meeting, the target Fed Funds rate was boosted to 1.75 percent. What the Fed wasn’t telling the U.S. public is the interest on the national debt is slated to skyrocket. With the lunatics running the asylum in D.C. that interest could exceed $500 BILLION per year by 2021. Talk about busting your budget!

The Fed likes to talk a good game about stable prices and full employment, but with every balance sheet reduction and hike in interest rates their game of monetary collusion is being laid bare for everyone to see. That 700 point drop in the Dow yesterday is just another reminder that prices are not what they seem and they haven’t been for years. We are living in an era of fake prices, fake markets and distorted real estate values for sure.

New home sales in the DFW area were higher year-over-year in February, but that’s likely because the average price of a new home sold (actually closed) in February in the Dallas Fort Worth metroplex actually dropped by 3 percent compared to the same month a year ago. If new home builders are going to maintain sales volume, they will need to build more affordable homes. Home buyers are clearly suffering from price exhaustion at this point, and the Fed isn’t helping matters by raising interest rates.

If you are looking for a new home, be careful who you ask for advice. There is a lot of misinformation from sell-side types who are more than eager to have you leverage yourself up to your eyeballs. For honest, objective, data-driven real estate news Aaron Layman Properties is your broker of choice!