New home sales measure the number of newly constructed homes with a committed sale during the month. The level of new home sales indicates housing market trends and, in turn, economic momentum and consumer purchases of furniture and appliances. Why Investors Care
| Released on 2/28/07 For Jan 2007 | ||||||||||||
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Highlights
New home sales fell sharply in January, down 16.6 percent to an annual rate of 937,000 units -- the lowest rate in four years. Sales declined in all regions especially in the West where sales hit a 12-year low.
Supply rose sharply to 6.8 months at the current sales rate vs. 5.7 months in December. High supply hurts home builders and will further limit new construction. High supply and low demand, however, were not reflected in prices which show a median of $239,800, up 0.2 percent month-to-month and down a modest 2.1 percent year-on-year.
Weather played an uncertain role in January, which saw early warmth followed by heavy conditions at month-end. The housing sector is definitely soft but likely not as soft as indicated by today's report, which contrasts with yesterday's solid data for existing home sales. But mortgage application data, the latest this morning, have been soft pointing to trouble for this month's home sales.
Bonds firmed following the report with the dollar showing no reaction. Next data on the housing sector will be January construction spending tomorrow morning.
New home sales showed improvement last month with a 4.8 percent increase in December to an annual rate of 1.120 million. Supply also fell to 5.9 months from 6.1 months in November. Markets will be watching to see if the trends in both continue - and point to a rebound in actual construction in coming months.
New home sales Consensus Forecast for January 07: 1.08 million-unit rate
Range: 1.00 million to 1.14 million-unit rate
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There is no question that lower interest rates boost home sales. Other factors also impact housing decisisions, such as employment and income growth, and wealth stemming from stock market gains. |
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