Sales of new homes jumped in January to an annualized rate of 764,000, according to the Census Bureau and the Department of Housing and Urban Development.
According to Census data, January’s pace increased from December, which was upwardly revised from 694,000 to 708,000.
January’s total, which is 7.9% above December’s pace, was also 18.6% higher than January 2019, when new home sales hit an annualized rate of 644,000.
During the month, new home sales surged boosted by lower interest rates, warm weather and an uptick in home building, said Robert Frick, corporate economist for Navy Federal Credit Union.
“We can expect the trend to continue as mortgage rates have fallen even lower in recent weeks, and more jobs are driving up demand,” Frick said. “However, scant evidence exists that home builders are making more low-priced homes, which are sorely needed by first-time homebuyers.”
“Years of supply shortages have bid up home prices out of reach of many lower- and even middle-income Americans, and to bring the opportunity of homeownership to those Americans we’ll need millions more homes built in the next few years, and more lower-priced homes,” Frick said.
The seasonally adjusted estimate of new homes for sale by the end of January was 324,000, representing a supply of 5.1 months at the current sales rate, rising from the previous month’s pace.
The median sales price of new homes was $348,200, while the average sale price was $402,300, according to Census data.
“After a mixed housing starts report and mediocre existing home sales report, this new home sales report is the first unambiguously positive sign for the housing market this month,” said John Pataky, executive vice president at TIAA Bank.
“Strong housing starts data through the second half of 2019 likely will contribute to solid new home development throughout the beginning of 2020,” Pataky said. “Additionally, this supply pipeline could help keep a lid on price growth, which ticked up toward the end of last year.”
As we head into the spring homebuying season, Pataky warns rising prices will swing the market toward sellers, but with a continued strong economy and low rates, he anticipates consumers will not enter empty-handed.
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