US new home sales in January declined to 494k, a larger decline than expected. The fall in sales was mainly due to the West region, where sales and increased sharply in the prior two months. The Northeast and the South posted moderate growth in sales of 30 k and 290k respectively, while the Midwest recorded stable sales figure of 54k.
Poor weather might have led to sharp decline in sales in the West region. Everywhere else, sales data for the previous month was revised higher by a net 10k and the three-month average pace of sales increased to 513k on stronger sales in the earlier two months. New home sales are likely to trend higher as gradual rebound in housing continues.
The weaker-than-expected new home sales data implies a little less commission for brokers in Q1. However, it is a small impact as new homes account for a small share of total sales. Average selling prices increased to $365k, countering this negative growth implication. This shows a stronger pace of nominal single family residential construction spending.
"On net, our Q1 GDP tracking estimate remains unchanged at 2.4%", says Barclays.
