Mild January Spurs New Home Sales

Mild January weather led to a strong jump in new home sales, HUD and the Census Bureau reported yesterday.

The report said sales of new single‐family houses in January came in at a seasonally adjusted annual rate of 764,000, 7.9 percent higher than the revised December rate of 708,000 and 18.6 percent than a year ago (644,000).

Regionally, a slump in the South was more than offset by gains elsewhere. In the South, sales fell by 4.4 percent to 369,000 units, seasonally annually adjusted, in January from 386,000 units in December and fell by 2.4 percent from a year ago.

In the West, sales jumped by 23.5 percent to 252,000 units in January, seasonally annually adjusted, from 204,000 units in December and improved by nearly 50 percent from a year ago. In the Midwest, sales jumped by 30.3 percent to 99,000 units in January from 76,000 units in December and improved by nearly 48 percent from a year ago. In the Northeast, sales rose by nearly 5 percent in January to 44,000 units from 42,000 units in December and improved by nearly 47 percent from a year ago.

The report said the median sales price of new houses sold in January 2020 was $348,200; the average sales price was $402,300. The seasonally adjusted estimate of new houses for sale at the end of January rose slightly to 324,000, representing a supply of 5.1 months at the current sales rate.

Mark Vitner, Senior Economist with Wells Fargo Securities, Charlotte, N.C., said the unseasonably mild weather and lower mortgage rates helped trigger the surge in January new home sales.

“This past January was the fifth warmest on record, and those mild temperatures allowed for more home buying than usual,” Vitner said. “While sales may revert to more typical levels in February, new home sales appear set for better days. Mortgage rates have fallen further in recent weeks and purchase applications have risen.”

Vitner noted home sales are also less likely to be impacted by coronavirus fears in the near-term. “Barring a sustained stock market sell-off, new home sales are expected to trend higher this year, reflecting strong job and income growth and more positive demographics,” he said.