New Home Sales Fell In January

Lower Than Expected Sales Indicate Market Slowdown

(AP)  Sales of new homes fell for the second time in three months in January, providing further evidence that the nation's five-year housing boom is slowing.

The Commerce Department reported Monday that sales of new single-family homes dropped by 5 percent to a seasonally adjusted annual rate of 1.233 million units last month.

That was a bigger drop than analysts had been expecting and provided support to the view that the housing market, after setting sales records for five straight years, is slowing under the impact of rising mortgage rates.

The 5 percent January drop in sales followed a revised 3.8 percent increase in December and was the biggest setback since a 7 percent drop in November.

Despite the fall in sales, the median price of a new home was up in January to $238,100, compared with $229,000 in December. The median is the point where half the homes sold for more and half for less. The January figure was the highest since an all-time high of $243,900 set in October.

Economists had expected sales to be supported by the warmest January in more than 100 years of record-keeping. Unusually mild weather had pushed up construction of new homes and apartments by 14.5 percent last month, the biggest increase in more than three decades.

However, the milder weather did not have the same positive impact on sales, which fell in all regions of the country except the West.

The biggest decline was a 14.9 percent decrease in sales in the Northeast, which followed an even bigger 23 percent plunge in sales in December. Sales in the Midwest were down 10.8 percent after having risen by 21.2 percent in December.

Sales fell by 10.3 percent in the South in January following a 1.2 percent gain in December.

Bucking the national trend, sales in the West posted an 11.3 percent increase in January after a 6.3 percent gain in December.