Friday
December 9, 2016

New-Home Sales Off to a Sluggish Start

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New-Home Sales Off to a Sluggish Start

Sales of new single-family homes couldn’t keep December’s strong pace and receded in January from last month’s 10-month high. Sales were led by plunges in the West, the Commerce Department reported Wednesday.

Overall, sales dropped 9.2 percent to a seasonally adjusted annual rate of 494,000 units.

In the West, new-home sales are seeing a surge in home prices while inventories remain tight. New-home sales plunged 32.1 percent in January compared to a year earlier and are at the lowest level since July 2014.

Despite heavy snowfall, the Northeast saw new-home sales tick up 3.4 percent in January while the South saw a more modest increase at 1.8 percent. The Midwest posted a 5.9 percent decline in new-home sales in January.

“Consumers are exhibiting caution in the face of some uncertain market conditions,” says David Crowe, chief economist of the National Association of Home Builders. “The average of the December-January reports shows that housing is moving forward at a modest pace, buoyed by relatively low interest rates and ongoing job creation.”

Existing-home sales report: Sales Make Gains, Prices 'Rising Too Fast'

The overall inventory of new homes rose 2.1 percent in January to 238,000 units, which is a 5.8-month supply at the current sales pace. This marks the highest inventory level since October 2009, but supplies remain tight based on historical standards.

The median price of new homes dropped 4.5 percent in January compared to a year ago and are at $278,800.

Source: National Association of Home Builders and “New Home Sales Hit 494,000 in January, Versus 520,000 Estimate,” Reuters (Feb. 24, 2016)