New home sales surge in January
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Numbers: U.S. new home sales rose slightly in January despite rising mortgage rates.
U.S. new home sales rose 1.5% in January to an annual rate of 661,000 from the revised 651,000 the previous month, the Commerce Department reported Monday.
This number is seasonally adjusted and represents how many homes would be built in a year if builders continued to build at the same pace each month.
The pace fell short of Wall Street expectations. Economists expected new home sales in January to total 680,000 units.
Mortgage rates rose to a six-week high in late January, which may have put off some buyers, according to data from Freddie Mac.
Despite the increase in new home sales in January, activity is still well below the recent peak of over 1 million sales in August 2020.
New home sales rates fell due to weakness in the South.
December data has been revised. New home sales rose a revised 7.2% in December, compared with earlier estimates of an 8% increase.
New home sales data is highly volatile and often revised from month to month.
Key details: The median sales price for new homes sold in January rose to $420,700 from $413,200 the previous month.
The supply of new homes for sale stagnated between December and January.
Most of the country reported an increase in new home sales, except for the South, where there was a 15.6% decline.
Overall, new home sales increased 1.8% compared to last year.
Big picture: The U.S. housing market still lags in the number of homes for sale relative to pent-up demand, so newly built homes could continue to be a bright spot as homebuilders add new inventory.
However, a rise in mortgage rates above 7% could dampen homebuying demand, some of which could already be seen in January’s figures.
Still, builders have been able to offset potential declines in the past by deploying a variety of incentives to boost sales, from buying mortgage rates to cutting prices.
Market reaction: Thanks to the increase in new home sales, stocks of most major construction companies, including DR Horton DHI, fell.
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The morning trading session woke up with SPDR S&P Homebuilders exchange-traded fund XHB..
