Economic Watch: New Home Sales Best Since July 2008
February 26, 2014
Following several recent less than encouraging recent economic reports one was issued Wednesday showing things are high stepping in at least one segment.
Sales of new homes in the U.S. increased 9.6% in January, according to the U.S. Commerce Department, pushing the annual rate to 468,000, its highest level since July 2008. The level is also 2.2% higher than the rate from a year earlier.
The department also upwardly revised the previously issued rate for December to 427,000 from 414,000.
Sales in the Northeast jumped a whopping 73.3% over the previous month, hitting a seven-month high, while increasing 11% in the West and adding 10.4% in the South, a more than five-year high. Sales in the Midwest fell 17.2% due mainly to winter weather.
A report issued a few days ago over existing home sales raised concern this home sales segment of the economy was slowing down.
“The fact that the cold weather that hit much of the country didn’t stop home buyers from going out and purchasing a piece of the American dream is a great sign,” said Kevin Kelly, chairman of the National Association of Home Builders. “However, the very low supply of new homes on the market and the continued concern of available buildable lots still have builders cautious about getting ahead of themselves.”
“We saw a weaker sales number in December 2013 than was previously trending, and I think much of January’s increase is due to sales catching up with pent up demand,” said National Assocaiation of Home Builders chief economist David Crowe. “Still, there is little doubt that historically low interest rates, affordable home prices and a healing economy are bringing buyers back into the marketplace.”
News of the increase in new home sales sent the S&P 500 Index trading above its record closing level as of mid-day on Wednesday.