WASHINGTON -- Sales of new U.S. homes slumped 6.9 percent in January, a possible sign that buyers paused during the government shutdown.
The Commerce Department said Thursday that new homes sold at a seasonally adjusted annual rate of 607,000 in January, down from 652,000 in December. The median sales price fell 3.8 percent from a year earlier to $317,200.
New-home sales in January ran slightly below the totals for 2018 and 2017. Buying fell in the Northeast, Midwest and South but rose in the West.
The housing market struggled in 2018 as rising mortgage rates priced many would-be buyers out of the market, but economists expect a rebound this year as mortgage rates have eased and the economy has gotten past the partial government shutdown that started the year.
"The partial federal government shutdown and the harsh winter weather that affected much of the country both weighed on economic activity," said Matthew Speakman, an economist analyst at the real estate company Zillow. "But our bet is that buyers will prove resilient as winter turns to spring, and throw their hats into the ring with the benefits of falling mortgage rates, falling home prices and rising inventory."
A possible sign that buyers were waiting out the economic turbulence in January was the decline in sales of homes in which a groundbreaking has yet to occur.
Sales of unbuilt homes plunged 26.8 percent in January after a sharp increase in December. The decline in this category accounted for all of the month's decline. Sales increased of homes that were already under construction or completed.
Economists generally expect a sales rebound from 2018, when rising mortgage rates caused sales of existing homes to slide downward for much of the year. But after peaking at nearly 5 percent in 2018, the average 30-year mortgage rate has been hovering around 4.4 percent in recent weeks, according to mortgage buyer Freddie Mac.
Freddie Mac reported Thursday that the 30-year fixed-rate average tumbled to 4.31 percent with an average 0.4 point. (Points are fees paid to a lender equal to 1 percent of the loan amount.) The 30-year fixed rate hasn't been this low in more than a year.
The 15-year fixed-rate average dropped to 3.76 percent with an average 0.4 point. It was 3.83 percent a week ago and 3.90 percent a year ago. The five-year adjustable rate average slipped to 3.84 percent with an average 0.3 point. It was 3.87 percent a week ago and 3.67 percent a year ago.
Because investors will probably be waiting to see what comes out of next week's Federal Reserve meeting, mortgage rates aren't expected to move much in the coming week. Bankrate.com, which puts out a weekly mortgage rate trend index, found that three-quarters of the experts it surveyed say rates will remain relatively stable in the coming week. Jim Sahnger, mortgage planner at C2 Financial, is one who predicts rates won't change.
"We saw a little bump down in rates from last week, following a disappointing read on the employment report where job growth stalled and favorable reads on inflation numbers," Sahnger said. "We do have a Fed meeting next week and all eyes and ears will await the statement. Look for dovish comments based on the global outlook for growth. Rates should stay tight going into the meeting and we'll see where they head after it."
Meanwhile, falling rates helped spur mortgage applications, according to the latest data from the Mortgage Bankers Association. The market composite index -- a measure of total loan application volume -- increased 2.3 percent from a week earlier. The refinance index slipped 0.2 percent from the previous week, while the purchase index grew 4 percent.
The refinance share of mortgage activity accounted for 38.6 percent of all applications.
The home sales data extend a run of weakness amid elevated prices and wage growth that -- while improving -- has failed to keep pace with housing costs in recent years. Other reports have showed home prices rose by the least in four years in December and existing home sales, which comprise the bulk of the market, fell in January to the slowest pace since 2015.
New-home purchases are seen as a timelier barometer of the market, as they're calculated when contracts are signed rather than when they close, like the previously-owned homes data. Other recent data showed contract signings to purchase existing homes rose in January by the most since 2010, snapping a six-month streak of declines.
Thursday's figures are the second set of monthly data in less than two weeks, an unusual occurrence caused by disruptions from the government shutdown. February figures will be released March 29, four days later than originally scheduled.
Information for this article was contributed by Josh Boak of The Associated Press, by Katia Dmitrieva of Bloomberg News and by Kathy Orton of The Washington Post.
Business on 03/15/2019
Print Headline: January new home sales fall; shutdown gets blame