January New Home Sales Post Modest Gain

New home sales rose modestly in January, hampered in part by bad weather in the West, HUD and the Census Bureau reported Friday.

The report said new single-family houses rose by 3.7 percent in January to 555,000 units, seasonally adjusted, from December’s revised 535,000 and improved by 5.5 percent from a year ago.

Regionally, sales rose except in the West, which saw a 4.4 percent decline in January to 151,000 units, seasonally adjusted, from a revised 158,000 in December, although sales improved by 16.2 percent from a year ago. In the South, sales rose by 4.3 percent to 290,000 units from 278,000 in December but fell by 1 percent from a year ago. In the Midwest, sales jumped by nearly 15 percent to 70,000 units in January from 61,000 in December and improved by 4.5 percent from a year ago. In the Northeast, sales rose by nearly 16 percent to 44,000 units in January from 38,000 units in December and improved by 22.2 percent from a year ago.

The median sales price of new houses sold in January fell slightly to $312,900. The average sales price fell slightly to $360,900. The seasonally adjusted estimate of new houses for sale at the end of January rose to 265,000, representing a supply of 5.7 months at the current sales rate.

Mark Vitner, senior economist with Wells Fargo Securities, Charlotte, N.C. noted a “slightly weaker” trend in new home sales. While sales rose in line with expectations in January, sales were revised down by 27,000 units for the prior three months.

“The lower sales figures suggest the post-election bump in mortgage rates took a larger bite out of sales, which are purchase contracts, and may have triggered an increase in cancellations,” Vitner said. “Sales rose in every region except the West during January. The unusually wet winter may have held back sales in January but sales are still trending higher on three-month moving average basis.”

Ralph McLaughlin, chief economist with Trulia, San Francisco, said new home sales have much room to grow. “In January, new home sales represented about 11.6 percent of all sales, which is less than half of the pre-recession average of 23.6 percent,” he said. “While it’s been tough for homebuyers to buoy existing home sales because of low inventory, it looks like there is much potential for new homes sales to run higher.”