New-home sales rose 15.6 percent in January to reach a seasonally adjusted annual rate of 437,000 units, HUD and the U.S. Census Bureau reports.
“The surge in demand for new homes this January is an excellent sign that the housing recovery is gaining steam and helping put more people back to work,” says Rick Judson, chairman of the National Association of Home Builders. “While we can’t expect to see double-digit sales growth every month, consumers are definitely coming off the fence as prices start to rise, and builders in some cases are having a tough time keeping up. Challenges related to credit availability, poor appraisals, dwindling lot supplies, spot shortages of skilled labor and rising materials costs are all weighing on the recovery process.”
Regionally, new-home sales increased the most in the West by 45.3 percent, followed by the Northeast with a 27.6 percent gain, an 11.1 percent increase in the Midwest, and a 3.2 percent increase in the South.
Meanwhile, inventories remain low. The months’ supply of new homes for sale dropped to the lowest level in nearly eight years.
“Today’s report shows a strong revival in new-home sales across all regions of the country and bodes well for the upcoming spring buying season,” says NAHB Chief Economist David Crowe. “That said, the razor-thin supply of new homes for sale is very concerning at a time when we are only about halfway back to what could be considered a ‘normal’ level of activity. Builders need to be able to refresh their inventories to keep the momentum going.”