New Home Sales increase to 764,000 Annual Rate in January

The Census Bureau reports New Home Sales in January were at a seasonally adjusted annual rate (SAAR) of 764 thousand. The previous three months were revised up, combined.

January new home sales rose 7.9% from December and 18.6% from a year ago, to 764,000 (SAAR), according to the U.S. Census Bureau.
The median sales price of new houses sold in January 2020 was $348,200, up 14% from a year ago.
Inventory of new homes was down 6.6% year-over-year, with the months’ supply of homes available for sale hitting its lowest level since November 2017.

After ending an otherwise strong 2019 on a down note, declining for three straight months, sales of new homes started the new year off on the right foot. These data are obviously welcome news for the housing market, which has generally been riding some positive momentum in recent months but continues to struggle with record low levels of inventory.

January’s figures suggest that buyers are making good on the optimism they’ve expressed in recent months. With the U.S. economy on stable footing, mortgage rates low and job creation continuing to hum along, it’s likely that demand for housing will remain high for the foreseeable future.

The question is whether there will be homes available for these would-be buyers to snap up — builders have been making some decent progress, but it will take a lot more than a few months of good work to dig out of the inventory hole the market is experiencing. Today’s release is a step in the right direction, as it should incentivize builders to continue their improved rate of construction. The housing market will need more of these going forward if it’s going to carry its positive momentum through the entirety of 2020.