U.S. New-Home Sales See Modest Uptick in January Amid Price Declines

📝 SUMMARY: The U.S. new-home market saw a modest improvement in January, with sales ticking up 1.5% to an annualized rate of 661,000, despite a downward revision of the previous three months' figures. This performance fell short of the Bloomberg economists' survey median prediction of 684,000. The slight upturn can be attributed to reduced mortgage rates at the beginning of the year, which bolstered homebuilder confidence and stimulated some activity in the resale market.

The housing sector showed encouraging signs at the outset of 2024, with the dip in mortgage rates lifting spirits. However, the Federal Reserve's stance on keeping borrowing costs elevated casts doubt on the sustainability of this momentum. January witnessed the median sales price of a new home decline to $420,700 compared to the same period last year, continuing a five-month downward pricing trend. This price fall coincides with an increase in the supply of new homes, which climbed to its highest level in over a year at 456,000 units, as reported by the Census Bureau and the Department of Housing and Urban Development.

Regionally, sales saw significant increases in the Northeast and West, while the Midwest showed modest gains, and the South experienced a decrease in transactions. New-home sales are regarded as a more current indicator of market conditions compared to sales of previously-owned homes, which are measured at contract closure. Notably, the latter rose in January by the most in nearly a year.

Despite the positive note in January, the data surrounding new-home sales remains volatile. The government's report indicates a 90% confidence level that the change in sales could range from a significant decline of 18.4% to an impressive increase of 21.4%, highlighting the uncertainty in the market.

🔍 SOURCE: https://www.bloomberg.com/news/articles/2024-02-26/us-new-home-sales-rise-after-downward-revisions-to-past-months