New home sales in January tumble from 10-month high

Washington

PURCHASES of new homes dropped more than forecast in January as contract signings slumped in the western US by the most since May 2010.

Sales declined 9.2 per cent to a 494,000 annualised pace after a 544,000 rate in December that was the strongest in 10 months, Commerce Department data showed on Wednesday. The drop in January brings new-home purchases more in line with the steady pace of progress since the end of the recession. Persistent job creation, signs of bigger wage growth and cheap borrowing costs are buoying sales and helping to alleviate the weakness in factory output tied to sluggish global demand.