New U.S. single-family home sales fell more than expected in January the Commerce Department estimated Thursday. The sales tumbled 12.6 percent to a seasonally adjusted 284,000 unit annual rate after a downwardly revised 325,000-unit pace in December, according to Reuters reports. This was also more than the decrease estimated by economists surveyed by other industry publications, including Bloomberg News and Market Watch. Compared to January last year sales were down 18.6 percent. Sales in the West plunged 36.5 percent after spiking 62.5 percent the prior month.
According to Bloomberg experts, declines in the West and South indicate that a California tax credit and bad weather may have played a role. Another important role was played by foreclosures that kept depressing prices, making distressed, previously owned properties more attractive to buyers than new houses. Previously owned home purchases unexpectedly rose 2.7 percent to a 5.36 million annual rate in January. Analysts expect new home sales to remain depressed.
“With a lot of new homes in areas with a lot of foreclosures and excess inventories, we would assume the new-home category would be the slowest to recover,” Mike Englund, chief economist at Action Economics LLC in Boulder, Colorado, told Bloomerg News.
January saw only 188,000 new homes available for sale, the lowest number since December 1967 - a reason to worry for many builders, as home construction keeps lagging behind the rest of the economy this year.