Steel Markets

New Home Sales Soften for Second Month in January

February 26, 2018

Sales of new single-family homes dropped in January to a seasonally adjusted annual rate of 593,000, according to the latest Department of Commerce data. January sales were 7.8 percent below December and 1 percent below the January 2017 rate. During the last three months, the average sales rate was 644,000.

The median sales price was $323,000 and the average sales price $382,000. Inventory at the end of January was estimated at 301,000 units, a supply of 6.1 months at the current sales rate.

Regionally, sales fell 33.3 percent in the Northeast and 14.2 percent in the South. Sales in the West were up 1 percent and jumped 15.4 percent in the Midwest.

“Given the softening in the housing data over the past few months, the recent increase in mortgage rates, as well as tax changes that reduce the attractiveness of mortgage financing, we think it is very likely that real residential investment will decline in the first quarter,” said JPMorgan economist Daniel Silver.

The National Association of Home Builders commented: “The decline in sales over the month of January coincides with an increase in interest rates. If the two are related, analysis suggests that sales may be lower in the short-term. Historical analysis suggests that the ‘longer-term’ trend in new home sales tends to remain in place. More fundamentally, the underlying economics of housing demand remain strong as job gains continue and home equity expands. However, the future level of interest rates is dependent on incoming data and the assessment of that data by market participants and policymakers.”