New home sales tank in January
* New home sales tanked 12.6% to a seasonally adjusted annual rate of 284,000 in January from 325,000 in December. That missed economist forecasts for a reading of 305,000. By region, sales fell 13% in the South and 37% in the West. They rose 17% in the Midwest and 55% in the Northeast.
* The supply of new homes on the market continues to fall. It slumped to 188,000 from 189,000 a month prior. That's the fewest new homes in inventory going all the way back to December 1967. On a "months supply at current sales pace" basis, we have about 7.9 months of supply on the market. That was up slightly from 7 in December.
* The median price of a new home slumped 1.9% to $230,600 from $235,000 in December. That was still up about 5.7% from year-ago levels however.
In January, the new home market didn't get much of anything done. The overall sales rate gave back most of its gains from December, while prices slumped a bit. Supply remains extremely low, with fewer new homes on the market now than at any time in the past 44 years. But competition from aggressively priced, distressed, "used" inventory continues to hamper the new home business.
My overall message remains the same: If you're looking for signs of a robust recovery in housing, you're just not going to find it anytime soon! Instead, sales, pricing, and construction activity are likely to bounce along the bottom for several quarters.