New-home sales surge to highest level since 2008
Purchases of new U.S. homes jumped in January to the highest level since July 2008, showing the industry will keep adding to growth in the economy.
Sales surged 15.6 percent to a 437,000 annual pace, exceeding the highest forecast in a Bloomberg survey and following a 378,000 rate in the prior month, figures from the Commerce Department showed Tuesday in Washington. The median estimate of 72 economists surveyed called for a 380,000 rate. The monthly gain was the biggest since 1993.
Demand picked up in all four regions as buyers took advantage of mortgage rates near a record lows, helping to boost the outlook for companies from PulteGroup Inc. to Mohawk Industries Inc. A stronger job market and less competition from foreclosures would ensure a more pronounced rebound in the market that's become a source of strength for the expansion.
"The housing recovery will continue at a fairly strong pace," said Aneta Markowska, chief U.S. economist at Societe Generale in New York, who projected a sales pace of 395,000. "Affordability is extremely high. Some improvement in income and employment is also supporting demand."
The median sales price increased 2.1 percent in January from the same month last year, to $226,400, Tuesday's report showed.
Purchases jumped 45.3 percent in the West to a 125,000 annual rate, the most since April 2008. Sales climbed 3.2 percent in the South to a 225,000 annual pace, the strongest since April 2010. Purchases increased 27.6 percent in the Northeast and 11.1 percent in the Midwest.
Sales of new properties are considered a timelier barometer than purchases of previously owned dwellings, which are calculated when a contract closes. Newly constructed houses accounted for about 7 percent of the residential market in 2012.
Existing-home sales increased 0.4 percent to a 4.92 million annual rate in January, the National Association of Realtors reported last week. The number of available properties slumped to 1.74 million, the lowest level since 1999.
The Realtors group's figures also showed distressed sales, comprised of foreclosures and short sales, in which the lender agrees to a transaction for less than the balance of the mortgage, accounted for 23 percent of existing-home purchases and were down from 35 percent in January 2012.
Conditions including low mortgage rates, continued increases in rental rates, rising home prices, and limited housing stock are lifting the outlook for companies including Bloomfield Hills, Michigan-based PulteGroup, the largest U.S. home-builder by revenue.