A sharp dropA sharp drop in sales in the West brought about an overall decline in the national rate of new home sales in January.  The U.S. Census Bureau and the Department of Housing and Urban Development reported that sales of newly constructed homes fell 9.2 percent from December and were 5.2 percent below sales in January 2015.  In the West sales plunged 32.1 percent month-over-month and they were down by 24.1 percent from a year earlier.

The report put the seasonally adjusted annual rate of sales in January at 494,000 units compared to 544,000 units in December and 521,000 in January 2015.  December sales had jumped 10.8 percent from November and Bloomberg noted that new home sales regularly undergo wild swings because the samples are small.  Econoday forecasters had predicted sales would slow from December's surge but the actual number was well below the consensus of 520,000 and even the lowest estimates which ranged from 505,000 to 550,000.

The disappointing report came one day after the National Association of Realtors® said sales of existing homes in January had risen at the quickest pace since last July and prices saw the largest annual appreciation since April 2015.  

On a non-seasonally adjusted basis there were an estimated 37,000 new homes sold in January. The unadjusted estimate for December was 38,000.

The median price of a home sold in January was $278,800, a 4.3 percent decline from last January when the median was $292,000.  The average price was $365,700, up from $356,000 a year earlier.

At the end of the reporting period there were an estimated 238,000 new homes for sale.  This is a 5.8 month supply at the current rate of sales.  Homes sold in January had been on the market a median of 3.4 months.

January new home sales in the Northeast region were up 3.4 percent from December and jumped 100 percent compared to January 2015.  The Midwest saw a decline in sales of 5.9 percent for the month and 1.5 percent year-over-year.  Sales increased slightly in the South, up 1.8 percent from December but they dipped 2.0 percent lower than a year earlier.