Sales of new homes plunged 16.6% in January to a seasonally adjusted annual rate of 937,000, the Commerce Department reported Wednesday. It was the lowest sales pace in four years, and was the biggest percentage decline in 13 years. Sales are down 20.1% compared with January 2006. The decline in sales was much sharper than expected. The inventory of unsold homes dipped to 536,000 from 537,000, representing a 6.8-month supply at the January sales pace, the most since a 7.2-month supply in October. The median price of a new home was down 2.1% year-over-year at $239,800.
New-home sales in the U.S. fell last month by the most in 13 years, pointing to more weakness in the real-estate market that limited economic growth last year.
The 16.6 percent decrease to an annual rate of 937,000 in January, less than any economist had forecast in a Bloomberg News survey, Commerce Department figures showed today. The pace of sales was the slowest since February 2003. A measure of housing inventory rose to the highest in three months.
The figures show home construction will remain a drag on the economy even with lower borrowing costs and more incentives from builders. More cuts in home prices may be needed to stir buyer interest as builders keep reporting increased rates of canceled orders.
The January decrease in sales was the largest since a 23.8 percent plunge in January 1994. Economists forecast new home sales would fall 3.6 percent to a 1.08 million rate, from a previously reported 1.12 million for December, according to the median of 69 projections in a Bloomberg News survey. Estimates ranged from a 1 million pace to 1.16 million.
The median price of a new home fell 2.1 percent in January, to $239,800 from $244,900 a year earlier. A report yesterday from S&P/Case-Shiller showed U.S. home prices rose 0.4 percent in the fourth quarter of 2006 compared with the same three months a year earlier, the smallest gain since the second quarter of 1993.
Today’s report showed the number of homes for sale at the end of the month fell to 536,000, from 537,000 in December. That left the supply of homes at the current sales rate at 6.8 months’ worth, the highest since October, compared with 5.7 months.