WASHINGTON -- Sales of new U.S. homes were basically flat in January, but they sold at a faster clip than forecast, a sign of stabilization in the housing industry.
The Commerce Department said Wednesday that new-home sales slipped 0.2 percent last month to a seasonally adjusted annual rate of 481,000. This marks a slight decrease from sales of 482,000 homes in December, but represents a solid 5.3 percent gain from a year ago when harsh winter weather caused home-buying to stall.
The median forecast of 76 economists surveyed by Bloomberg called for 470,000 sales.
The market "continues to move slowly forward, but at a modest pace," said Gregory Daco, lead U.S. economist at Oxford Economics USA Inc. in New York. "We're expecting the different drivers of the housing sector to get in place. That's an environment of low rates, reduced home price inflation, accelerating wage growth and rising or strong confidence."
Despite the increasingly favorable economy, home sales have been sluggish at the start of the year. Still, many analysts expect that the housing market will gather momentum as spring nears.
Revisions made to sales in previous months indicate that sales should continue to make progress as the recovery from the housing bust and recession is entering its sixth year.
"Activity for the rest of the year is likely to improve at a modest, albeit choppy, pace," said Blerina Uruci, an analyst at the bank Barclays.
Yet January proved to be a rocky month for real estate.
Since the first of the year, snow has buried parts of the Northeast, cutting into open-house visits. Too few homes are being listed for sale, and those that are on the market still seem to be out of reach for many prospective buyers even with the recent hiring surge and historically low interest rates.
"The weather may make it difficult to determine the underlying strength in construction activity in the near-term," said Michelle Girard, an analyst at RBS Securities. "However, anecdotal reports from areas not affected by weather have indicated healthy activity."
New-home sales account for about 7 percent of the residential market and are tabulated when contracts are signed, making them a timelier barometer than purchases of previously owned dwellings. The latter are calculated when a contract closes, typically a month or two later.
Sales of previously owned homes last month sank 4.9 percent to a seasonally adjusted annual rate of 4.82 million. Contributing to that nine-month low was a tight inventory of homes on the market that sent prices higher. That may be pushing some home shoppers to wait for more choices at more inviting prices.
But builders have yet to significantly increase construction.
Many firms are focused on selling to wealthier buyers, instead of competing on volume by constructing more houses at more affordable levels. The median sales price rose 9.1 percent since January 2014 to $294,300.
Toll Brothers, which specializes in higher-end homes, reported Monday that its quarterly profits jumped 78 percent as the average price of a home sold by the Pennsylvania builder climbed to $821,500 from $766,100.
And instead of upgrading to new houses, some homeowners are renovating their current properties, said Nino Sitchinava, principal economist at Houzz, the online resource for remodeling and home design. That's a welcome development for Home Depot Inc., the country's largest home improvement retailer. The Atlanta-based chain took advantage of a surge in renovation spending, reporting fourth-quarter profit that topped analysts' estimates.
"We had a strong finish to the year, as strength across the store, the recovering U.S. housing market and solid execution aided our business in 2014," Craig Menear, the company's chairman, chief executive and president, said Tuesday in a statement.
The winter weather caused sales of new homes to halve in the Northeast, while the West experienced a slight drop and the South and Midwest each reported gains, according to the Commerce Department report.
Home values are appreciating at a slower rate since 2014, yet they continue to outpace wage gains.
Average hourly wages grew 2.2 percent over the past 12 months, which is roughly half of the increase in home values, according to the Standard & Poor's/Case-Shiller 20-city home price index released Tuesday.
Information for this article was contributed by Josh Boak of The Associated Press and by Nina Glinski and Kristy Scheuble of Bloomberg News.
Business on 02/26/2015