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New-home sales fall in January after December’s 12-month high
New-home sales fell 4.5 percent in January to 801,000 annualized units, while December saw an upward revision of 28,000 units. Compared to last year, January sales were 19.3 percent lower. NAFCU Chief Economist and Vice President of Research Curt Long analyzes the data in the latest Macro Data Flash report.
“New home sales fell in January after December's 12-month high,” said Long. “Supply chain issues are still bedeviling builders who face increased difficulties obtaining land, labor and materials.
"This has pushed back construction timelines,” added Long. "Seventy-five percent of sales this month were of homes not yet completed, while completed homes are remaining on the market for just 2.5 months, matching an all-time low dating back to 1975. The overall inventory situation in the new home market is better than for existing homes, leading to lower overall price appreciation in the former than in the latter."
Sales fell in three Census regions with the Northeast falling 10.7 percent, followed by the South (- 7.4 percent), and the Midwest (-3.7 percent). The West region rose 1.2 percent on the month.
Based on current month sales, there were 6.1 months of supply in January, up by 0.5 months from December. Unsold homes left on the market increased by 12,000 homes to 406,000 in December, representing a 34.4 percent increase from year-ago inventory levels.
“The housing market is desperate for inventory of any stripe, but supply chain snags have been slow to thaw," noted Long. "Rising mortgage rates could help bring greater balance between supply and demand, but that is unlikely to happen until the second half of the year.
"For now, home sales should continue to trend up slowly as supply constraints result in plenty of unmet demand," concluded Long.
Of note, the median home price, non-seasonally adjusted, rose by 7.0 percent in January to $423,300, which is 13.4 percent higher than last year.
For more economic updates from NAFCU's award-winning research team, view all of NAFCU's Macro Data Flash reports.