U.S. Sales of new homes came in much below consensus expectations in January. On a sequential basis, new homes sales dropped 6.9 percent, as compared with the consensus expectations of a rise of 0.2 percent and prior month’s rise of 3.8 percent. Nevertheless, the prior three months’ results were upwardly revised. The new level in January was still lighter than anticipated at 607,000 units as compared with expectation of 622,000.
The new report indicated a marked upward revision that left December even stronger, but a sharp fall in January. New home sales has weakened from the spring through most of the fall. The last three months have brought hints of a rebound, but with the fall in January, the underlying trend is still best described as downward, noted Daiwa Capital Market Research in a report.
The pickup in November and December was most likely due to falls in interest rates in those months. January showed little follow through, implying that interest rates might need to fall further to continue the rally.
The number of homes on the market dropped 1.5 percent in January, but the sharper fall in sales led to a rise in the months’ supply, said Daiwa Capital Market Research.
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