New Home Sales Tumble, Pulled Down by Tight Supplies in U.S. West

Sales of new U.S. single-family home sales fell more than expected in January, from a 10-month high the previous month, pressured by plunging sales in the West, according to new data Wednesday from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.

Builders remain confident, however, pointing to caution among prospective buyers in the wake of instability in the financial markets. On the bright side, average fixed mortgage rates have remained well below 4 percent, rekindling refinancing demand in recent weeks.
Sales of newly built, single-family homes sank 9.2 percent in January to a seasonally adjusted annual rate of 494,000 units, according to newly released data by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.
“After an unusually high December reading, some pullback is to be expected,” said Ed Brady, chairman of the National Association of Home Builders (NAHB) and home builder and developer from Bloomington, Ill. “On the positive side, builders are adding inventory in anticipation of future business.”
The inventory of new homes for sale rose to 238,000 in January, which is a 5.8-month supply at the current sales pace and the highest level since October 2009.
“Consumers are exhibiting caution in the face of some uncertain market conditions,” said NAHB Chief Economist David Crowe. “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.”
Sales in the West plummeted 32.1 percent to their lowest level since July 2014. The percent decline was the largest since May 2010. The west has seen a sharp rise in home prices because of tight inventories.
Regionally elsewhere, new home sales rose 3.4 percent in the Northeast and 1.8 percent in the South. Sales dropped 5.9 percent in the Midwest.

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