WASHINGTON (AP) – Americans stepped back from buying new homes in January, as purchases plunged sharply in western states where prices are typically higher.
The Commerce Department said Wednesday that new-home sales fell 9.2 percent last month to a seasonally adjusted annual rate of 494,000. Most of the decline stemmed for a 32.1 drop in sales in the West. Sales also slipped in the Midwest, while edging up in the Northeast and South.
The pace of buying new homes last month slipped below last year’s sales total of 501,000, a possible sign of mounting price pressures despite low mortgage rates and job gains that have pushed the unemployment rate down to 4.9 percent. But new-home sales also tend to be a volatile government report with revisions and large swings on a monthly basis.
“With inventory still very tight, prices will continue to firm, though the short-term numbers are so volatile that the trend is hard to spot,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics.
Last month’s decrease potentially complicates the outlook for residential real estate. Rising demand for existing homes had sparked hopes that builders will ramp up construction and sales of new homes will further accelerate. The 14.5 percent increase in new-home sales last year fed into those expectations. But builders have increasingly focused on the more affluent slivers of the market, while the decline in sales listings of existing homes indicate that many Americans may have lost interest in upgrading to a new property.