Off The Wire
U.S. new home sales beat expectations; December data revised higher
WASHINGTON (Reuters) - Sales of new U.S. single-family homes increased more than expected in January, boosted by historically low mortgage rates and an acute shortage of previously owned houses on the market.
New home sales rose 4.3% to a seasonally adjusted annual rate of 923,000 units last month, the Commerce Department said on Wednesday. December’s sales pace was revised higher to 885,000 units from the previously reported 842,000 units.
Economists polled by Reuters had forecast new home sales increasing 2.1% to a rate of 855,000 units in January.
New home sales are drawn from a sample of houses selected from building permits and tend to be volatile on a month-to-month basis. New home sales surged 19.3% on a year-on-year basis in January. Sales increased in the South, Midwest and West, but declined in the Northeast.
U.S. financial markets were little moved by the data.
The National Association of Realtors reported last week that the supply of previously owned homes available for sale plunged to a record low in January. That has pushed buyers toward the market for new homes. Demand for housing is being driven by Americans seeking more space for home offices and schooling because of the year-long COVID-19 pandemic.
Though mortgage rates have risen in recent weeks in tandem with U.S. Treasury yields as investors anticipate stronger economic growth and higher inflation, they remain very low by historic standards.
The government reported last week that building permits soared in January to their highest level since May 2006. But expensive inputs and lack of land pose a threat to continued robust housing market gains.
According to a survey of single-family homebuilders this month, record high lumber prices were “adding thousands of dollars to the cost of a new home and causing some builders to abruptly halt projects.” Softwood lumber prices jumped by historic 73% on a year-on-year basis in January.
The median new house price increased 5.3% from a year earlier to $346,400 in January. There were 307,000 new homes on the market last month, up from 299,000 in December. At January’s sales pace it would take 4.0 months to clear the supply of houses on the market, down from 4.1 months in December.
Reporting by Lucia Mutikani; Editing by Andrea Ricci