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.
IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.
This information/research prepared by IGA or IGA Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.
Please see important Research Disclaimer.
European Central Bank meeting
Learn about how the ECB meeting affects interest rates and price stability ahead of the next announcement on 24 October 2019.
- How might the next meeting affect the markets?
- What are the key rate decisions to watch?
- Why is the Governing Council announcement important for traders?
Live prices on most popular markets
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.