US new home sales down 6.9% in January
US new home sales declined after growth in December.
The US housing market struggled in January 2019. US new home sales at the start of the year dropped by almost 7% after rising in December.
January US new home sales: key figures
|Sales of new homes||-6.7%|
|Median sales price of homes||$317,000|
|New homes at annual rate||607,000|
|Sales of yet-to-be constructed homes||-26.8%|
Why did US new home sales decline?
Sales of new homes dropped 6.7% to 607,000 units sold. Sales of yet-to-be constructed homes plummeted 26.8%. Median sales prices declined to $317,200.
New home sales likely declined because of the month-long government shutdown that affected many workers' finances. Matthew Speakman, economic analyst at real estate company Zillow, noted that the harsh US winter also contributed to a housing purchase slowdown.
‘The partial federal government shutdown and the harsh winter weather that affected much of the country both weighed on economic activity,’ said Speakman.
Joel Naroff, president of Naroff Economic Advisors, agreed that those two factors hurt US new home sales.
‘It is hard to visit a construction site when there is snow or it is so cold you don’t want to step outside. In large parts of the nation, that is what happened. And then there was the hit to confidence that the shutdown created, which didn’t help either,’ said Naroff.
Despite the decline, there was some positive news. New home sales in Western states rose by 28% in January.
What will happen to US new home sales in the future?
While home sales plummeted in January, there is optimism about housing purchases in the future. Speakman said that warmer spring weather and declining mortgage rates should boost new home sales.
‘Our bet is that buyers will prove resilient as winter turns to spring, and throw their hats into the ring with the benefits of falling mortgage rates, falling home prices and rising inventory’, said Speakman.
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