A surge in new-home sales in January is easing concerns about a deeper housing-sector slowdown. New single-family home sales rose 9.6% to a seasonally adjusted annual rate of 468,000 from a month earlier, reaching their highest level since July 2008, the Commerce Department said Wednesday. From a year ago, new-home sales were up 2.2%.
New-home sales measures are typically choppy around this time of year as snowstorms and cooler temperatures can shutter construction sites and discourage people from venturing out to look at properties. Because the level of activity is so low, seasonal adjustments can magnify month-to-month changes, said Pierpont Securities chief economist Stephen Stanley.
In another sign of improvement for the housing market, home prices last year posted their largest annual gain since 2005, according to the Standard Poor’s/Case-Shiller price index Tuesday.
Rising mortgage rates and home prices could encourage prospective home buyers to move quickly. Some economists say this pent-up demand will help drive traffic and activity in the months ahead. Indeed, a separate Commerce Department report last week said permits for new homes, a sign of future demand, were up from a year earlier.
Still, other housing-market indicators are showing signs of weakness. Construction of new homes tumbled last month, the Commerce Department said last week. And a measure of sales of previously owned homes fell sharply in January as well, according to a National Association of Realtors report last week. Those sales, which make up the bulk of home transactions, were down to the lowest level in 18 months.
New-home sales peaked in July 2005, when they hit an annual pace of nearly 1.4 million. Sales hit a low of 270,000 in February 2011.
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