Coverage: New home sales fell 6.9% in January

New-home sales fell 6.9% in January from a month earlier to a seasonally adjusted annual rate of 607,000, the Commerce Department said Thursday.

David Harrison and Sarah Chaney of The Wall Street Journal had the news:

Economists surveyed by The Wall Street Journal had expected new-home sales to rise to an annual rate of 622,000 in January. The rate in December was revised up to 652,000 from an initial estimate of 621,000.

The new-home sales figure is a rough estimate that comes with a big margin of error. The figure is often revised later.

Sales of new homes were down 4.1% in January compared with a year earlier.

Higher mortgage rates and a run-up in prices put a dent in home purchases in 2018. The average rate on a 30-year, fixed-rate mortgage rose about 1 percentage point to nearly 5% from the start of 2018 to last November, according toFreddie Mac . Since then, borrowing costs have dropped, hitting a low of 4.35% at the end of February before inching up again last week.

Lucia Mutikani of Reuters reported that new home sales fell 15.1% in the South:

New home sales in the South, which accounts for the bulk of transactions, tumbled 15.1 percent in January. Sales dropped 11.4 percent in the Northeast. Sales in the Midwest plunged 28.6 percent to the lowest level since January 2014. But sales rose 27.8 percent in the West to a 10-month high.

The median new house price fell 3.8 percent to $317,200 in January from a year ago. There were 336,000 new homes on the market in January, down 1.5 percent from December. Supply is, however, just over half of what it was at the peak of the housing market boom in 2006.

At January’s sales pace it would take 6.6 months to clear the supply of houses on the market, up from 6.3 months in December. Just under two-thirds of the houses sold last month were either under construction or yet to be built.

Jeffry Bartash of MarketWatch.com reported that the West was the only region to see an increase:

Sales fell by double digits, in percentage terms, in every region except the West. Sales jumped 28% in the western part of the U.S.

New home sales were 4.1% lower in January compared to one year ago.

The median sales price of new homes, meanwhile, fell again to $317,200. Prices were 3.8% lower vs. one year ago, reflecting a decline in demand.

At the current pace of sales, it would take 6.6 months for all the new homes to be sold. That’s a bit higher than the six-month supply that’s long been considered a sign of a smoothly operating housing market.

The preliminary report on new home sales is often erratic and prone to large revisions as the changes in the final two months of 2018 show.