New home sales sink 9.2% to 494,000 annual rate

By Andrea Riquier, Market Watch–

Sales of new homes plummeted 9.2% to a seasonally adjusted annual rate of 494,000 in January, the Commerce Department said Wednesday.

January’s figure was the lowest since October and missed forecasts of a 520,000 annual rate from economists surveyed by MarketWatch. It was 5.2% lower than the same period a year ago.

The decline was led by a 32.1% plunge in sales in the West. Sales ticked up in the Northeast and South, and fell 5.9% in the Midwest.

The median price paid in January was $278,800, down from a revised $295,800 in December. There was 5.8 months’ worth of homes available for sale during the month, the most since September.

While the housing sector has benefitted from a stronger economy that’s boosting demand, the market remains off-kilter. Demand is far outpacing supply, pushing prices ever higher and skewing builder activity toward higher-end projects.

New home sales data are often volatile and heavily revised. The 2015 total sales tally of 501,000 was 14.5% higher than 2014’s total.

Home builder sentiment has moderated slightly in recent months, according to industry surveys, and housing starts fell unexpectedly in January.

Still, the total number of housing units under construction in January was at its highest in nearly eight years. And many builders remain bullish on the market as they continue to post solid sales and revenue growth.