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US new home sales fall more than expected in January
SALES of new US single-family homes fell more than expected in January, suggesting that the housing market weakness persisted early in the first quarter, despite a moderation in mortgage rates.
The Commerce Department said on Thursday that new home sales declined 6.9 per cent to a seasonally adjusted annual rate of 607,000 units. December's sales pace was revised higher to 652,000 units from the previously reported 621,000 units.
Economists polled by Reuters had forecast new home sales, which account for about 11 per cent of housing market sales, slipping 0.6 per cent to a pace of 620,000 units in January.
New home sales are drawn from permits and tend to be volatile on a month-to-month basis. They fell 4.1 per cent from a year ago.
Affordability remains a challenge, especially at the lower end of the market, even as mortgage rates have dropped from last year's highs and house price inflation has slowed.
Expensive lumber as well as land and labour shortages continue to constrain builders. Economists expect the housing market, which hit a soft patch last year, to remain sluggish through the first half of 2019.
Investment in homebuilding contracted 0.2 per cent in 2018, the weakest performance since 2010.
The release of the January new home sales report was delayed by a 35-day partial shutdown of the federal government that ended on Jan 25. February's new home sales report, which was scheduled for release on March 25, will now be published four days later on March 29.
New home sales in the South, which accounts for the bulk of transactions, tumbled 15.1 per cent in January. Sales dropped 11.4 per cent in the North-east.
Sales in the Midwest plunged 28.6 per cent to the lowest level since January 2014. But sales rose 27.8 per cent in the West to a 10-month high.
The median new house price fell 3.8 per cent to US$317,200 in January from a year ago. There were 336,000 new homes on the market in January, down 1.5 per cent from December. Supply is, however, just over half of what it was at the peak of the housing market boom in 2006.
At January's sales pace it would take 6.6 months to clear the supply of houses on the market, up from 6.3 months in December. Just under two-thirds of the houses sold last month were either under construction or yet to be built. REUTERS