New-home sales skidded in January, with sales of new, single-family homes down 7.8 percent to 593,000, according to the U.S. Census Bureau and the Department of Housing and Urban Development (HUD). The average new-home sales price was $382,700, while the median was $323,000. New-home listing inventory was 301,000—6.1-months supply.
“The moderation in new-home sales may be attributable to the interest rate environment, which could be causing short-term market volatility,” said Michael Neal, senior economist for the National Association of Home Builders (NAHB), in a statement. “However, the underlying economic fundamentals for housing demand remain strong and we expect more prospective home buyers to enter the market in 2018.”
“New-home sales have taken a pause this month, but our builders are reporting confidence in the overall market and future sales conditions,” said Randy Noel, chairman of the NAHB. “With strong consumer demand for housing, we expect the sales numbers to move forward in the months ahead.”
“New-home sales may have come in lower than economists expected, but when we look at the bigger picture, inventory of new homes jumped to 301,000 units—the most since March 2009—which will lead to a healthier and more balanced housing market,” says Bill Banfield, executive vice president at Quicken Loans. “It’s worth noting, however, that new homes usually come with a bigger price tag, something that can turn away many first-time buyers.”
“Though both new-home sales and prices dipped for the second month in a row, these lower prices don’t negate earlier price gains that have put new homes out of reach for the majority of buyers,” says Joseph Kirchner, senior economist at realtor.com®. “This is disappointing given the importance of new construction in powering overall home sales.
“[This] report provides further evidence that builders are slowly shifting toward more moderately-priced homes,” Kirchner says. “The drop in sales may be due to saturation in the upper price range of the market, which should compel builders to follow the market and build more moderately-priced homes. We may be beginning to see this with the largest drop for new-home sales in homes priced above $500,000.”
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