After reporting sharp increases in U.S. new home sales over the two previous months, the Commerce Department released a report on Thursday showing new home sales pulled back by much more than expected in the month of January.
The Commerce Department said new home sales tumbled by 4.5 percent to an annual rate of 801,000 in January after spiking by 12.0 percent to an upwardly revised rate of 839,000 in December.
Economists had expected new home sales to dip by 0.6 percent to an annual rate of 806,000 from the 811,000 originally reported for the previous month.
The much bigger than expected decrease came after new home sales reached their highest annual rate since last March.
The sharp pullback came as new home sales in the South plunged by 7.4 percent to an annual rate of 438,000 in January.
New home sales in the Northeast also plummeted by 10.7 percent to a rate of 25,000 and new home sales in the Midwest slumped by 3.7 percent to a rate of 78,000.
Helping to limit the downside, the report showed new home sales in the West jumped by 1.2 percent to a rate of 260,000.
The Commerce Department also said the median sales price of new houses sold in January was $423,300, up 7.0 percent from $395,500 in December and up 13.4 percent from $373,200 a year ago.
The estimate of new houses for sale at the end of January was 406,000, representing 6.1 months of supply at the current sales rate.
“We expect new home sales to lose more momentum as we move further into 2022,” said Nancy Vanden Houten, Lead US Economist at Oxford Economics. “Demand should remain strong, but high home prices and the recent spike in mortgage rates will price many buyers out of the market.”
Last Friday, the National Association of Realtors released a separate report showing existing home sales unexpectedly surged in the month of January.
NAR said existing home sales spiked 6.7 percent to an annual rate of 6.50 million in January after tumbling 3.8 percent to a revised rate of 6.09 million in December.
The substantial rebound surprised economists, who had expected existing home sales to slump by 1.3 percent to a rate of 6.10 million from the 6.18 million originally reported for the previous month.
With the unexpected jump, existing home sales reached their highest annual rate since hitting 6.65 million in January of 2021.
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