Sales of new homes were stronger than expected in January holding close to the highest level in more than six years
The annual rate of 481,000 houses purchased was just slightly less than the 482,000 pace in December and the second strongest level since July 2008, reported the Commerce Department today. Economists in the Bloomberg survey had forecast 470,000 new homes.
Sales climbed in two of the four survey regions, rising in the Mid-West but falling in the North-East, both areas hard hit by exceptionally cold and snowy winter weather, and gaining in the South and dropping slightly in the West.
The median sale price rose 9.1 percent to $294,300, though the average price slipped 8 percent to $348,300. Prices rose in all four geographic regions, with the largest jumps coming in the Northeast 13 percent to $687,300 and the West 7 percent in the West to $393,200.
The supply of homes for sales held steady at 5.4 months at the current selling rate. There were 218,000 new homes on the market in January, essentially unchanged from December's 215,000.
Realtors sold 439,000 new home in 2014, up from 430,000 the prior year and the best year for sales since 2008. The market peaked at 1.28 million in 2005 and then slid each year as the housing bubble burst, bottoming at 306,000 in 2011, and the lowest in the record of this series which goes back to 1963.
New home sales are only 7 percent of the overall market. Sales of previously occupied homes, or existing homes as they are called by the National Association of Realtors which tabulates sales, fell to an annualized rate of 4.82 million in January from 5.07 million in December, less than the 4.95 million forecasts.
Home sales have been supported by strong job growth and mortgage rates near historic lows. But other factors including low household formation rates, stringent credit requirements, poor wage gains and part time employment have kept the housing markets from returning to strong expansion. For most people buying a home is the largest financial commitment they will make, and given the economic history of the past six years, caution is understandable.
Chief Market Strategist
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