Wall Street Journal By SARAH PORTLOCK And JONATHAN HOUSE CONNECT
Feb. 26, 2014 10:03 a.m. ET
Sales of newly built homes surged in January, an unexpected sign of strength after a long stretch of weakness in the housing sector. Trulia’s Chief Economist Jed Kolko joins MoneyBeat to discuss whether home prices have peaked. Photo: Getty Images.
WASHINGTON—Sales of newly built homes surged in January, an unexpected sign of strength after a long stretch of weakness in the housing sector.
New single-family home sales rose 9.6% to a seasonally adjusted annual rate of 468,000 from a month earlier, reaching their highest level since July 2008, the Commerce Department said Wednesday. December’s figure was revised up to 427,000.
Economists surveyed by Dow Jones forecast January home sales would fall to an annual pace of 401,000.
Last month’s increase was boosted by sales in the northeast, where activity expanded by 73.7% and reversed the prior month’s declines. The South and West also saw gains, but new home sales in the Midwest fell.
The figures come after months of slowdown that many economists are attributing at least in part to cold weather. Snow storms and cooler temperatures can shutter construction sites and discourage people from venturing out to look at properties.
In another sign of strong demand for housing recently, home prices last year posted their largest annual gain since 2005, according to the Standard Poor’s/Case-Shiller price index Tuesday.
Rising mortgage rates and home prices could encourage prospective home buyers to move quickly. Some economists say this pent-up demand will help drive traffic and activity in the months ahead. Indeed, a separate Commerce Department report last week said permits for new homes, a sign of future demand, were up from a year earlier.
Still, other housing market indicators are showing signs of weakness. Construction of new homes tumbled last month, the Commerce Department said last week. And a measure of sales of previously owned homes fell sharply in January as well, according to a National Association of Realtors report last week. Those sales, which make up the bulk of home transactions, were down to the lowest level in 18 months.
New-home sales peaked in July 2005, when they hit an annual pace of nearly 1.4 million. Sales hit a low of 270,000 in February 2011.
Write to Sarah Portlock at sarah.portlock@wsj.com and Jonathan House at jonathan.house@wsj.com
