Washington (AFP) – Sales of new US homes slumped more than expected in January, government data showed Wednesday, with cold weather and stubborn cost-of-living pressures weighing on buyers as Donald Trump returned to office. New home sales came in at a seasonally adjusted annual rate of 657,000, 10.5 percent down from December’s revised level of 734,000. This was significantly lower than the 681,000 figure a Briefing.com consensus of analysts expected, as bad weather kept potential homebuyers home and mortgage rates remained elevated.
Sales of new properties have been helped in recent years as existing homeowners have been reluctant to enter the market with interest rates high. This has pushed some buyers towards new properties — new home sales hit their highest in three years in 2024. But there are risks to sales and residential investment this year, noted Ryan Sweet, chief US economist at Oxford Economics, in a note. This is due to “high mortgage rates, potential for tariffs on imported building materials from Canada and Mexico along with potential labor supply issues stemming from the Trump administration’s immigration policies,” he noted.
On the upside, inventories are not an issue, Sweet said, adding that builders could still boost sales via incentives. The Federal Reserve rapidly lifted the benchmark lending rate in 2022 to curb surging inflation but has since started to cautiously lower it. In January, the median sales cost for new houses was $446,300, a pick-up from December’s figure and the highest in more than two years.
Demand for new homes appears to be flagging, analysts at Pantheon Macroeconomics said in a recent note. “Sales likely were also weighed down by the weather; last month was the coldest January since 1988,” Pantheon added.
© 2024 AFP
