New Home Sales: Another Month of Declines To Start 2018

Bottom Line: Weather likely played a factor in new home sales falling for the second straight month in January. The Northeast and the South saw sharp declines, while the West and Midwest, where weather was better, saw gains. Still, sales over the last three months have averaged 644K, just 3.2% above the 6 month average of 624K, suggesting the upward trend is losing some momentum. Given mixed trends in other housing data and affordability issues, this trend in new homes bears watching into the Spring and Summer months. New Home Sales New Home Sales FELL by 7.8% to 593k, after the prior month was revised higher to 643k. This compared with market expectations for an increase to 647k, from the unrevised December level of 625k. Sales are now 1.0% BELOW their year ago level, -- but they are still 57.3% BELOW their July 2005 peak. The Inventory of Homes Available for Sale ROSE by 2.4% to 301k. Inventories are now 15.3% ABOVE their year ago level but still 47.4% BELOW their July 2006 peak level. Combined with the decline in sales, the Months' Supply increased to 6.1 months from 5.5 months. This is modestly ABOVE a normal level of 6.0 months and well BELOW its peak of 12.2 in January 2009. Home Prices ROSE with median prices 2.5% ABOVE their year ago level and with average prices 7.0% ABOVE their year ago level.