Sales of New Homes Declined More Than Forecast in January
Daniel Acker/Bloomberg News
Purchases of new homes dropped more than forecast in January as contract signings slumped in the western United States by the most since May 2010.
Sales declined 9.2% to a 494,000 annualized pace after a 544,000 rate in December that was the strongest in 10 months, Commerce Department data showed Feb. 24. The median forecast of economists surveyed by Bloomberg News called for 520,000. Sales in the West fell 32.1%.
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 alleviate the weakness in factory output tied to sluggish global demand.
“At the end of the day, if the labor market is still improving, household spending in general probably is going to be doing fine,” Jim O’Sullivan, chief U.S. economist at High Frequency Economics in Valhalla, New York, said before the report. “Assuming the economy keeps chugging along here, I would assume that housing will do more than its share.”
January sales were the weakest in three months. Estimates of 75 economists in the Bloomberg survey ranged from 500,000 to 552,000. While the December sales data were unrevised, the Commerce Department revised up November figures.
The January data should be considered as preliminary. The report said there was 90% confidence the change in sales last month ranged from a 22.7% drop to a 4.3% increase.
In addition to the decline in the West, where the 110,000 annualized sales pace was the weakest since July 2014, purchases dropped 5.9% in the Midwest. Sales advanced 3.4% in the Northeast and 1.8% in the South.
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