January sales of new single-family homes in the U.S. declined 0.9 percent to a seasonally adjusted annual rate of 321,000, but December sales were revised upward, suggesting a nascent housing market recovery, according to the Commerce Department and U.S. Census Bureau.
There were 324,000 units sold in December, the highest level in a year. January's sales also beat expectations from economists polled by Reuters, who had forecast an annual pace of 315,000 units for January. Year-over-year, sales were up 3.5 percent from 310,000 in January 2011.
The median sales price for new home sales in January was $217,100, while the average sales price was $261,600.
The supply of new homes in January fell to 151,000, representing 5.6 months of supply, the lowest since January 2006. In December, there was about a 5.7 months supply. However, a decline in supply doesn't necessarily indicate recovery, some housing experts argue, and may just indicate fewer foreclosured homes entering the market.
The report shows traction for a housing industry anxious to ascend from the bottom, said Mitchell Hochberg, principal of New York-based Madden Real Estate Ventures, in an e-mail. To climb back, foreclosure overhang needs to clear, prospective home buyers must find it less difficult to qualify for a mortgage and consumer confidence must improve.
New home sales account for only around 7 percent of the nation's current housing market, but are vital for driving construction and development jobs.
New homes are also generally more expensive than older ones, and builders such as Toll Brothers Inc. (NYSE:TOL) and D.R. Horton Inc. (NYSE:DHI) have benefited from gains.
Historically low interest rates have also helped buyers, but tougher mortgage standards and falling home prices have held the recovery back. The relatively warm winter may have also helped drive more traffic to home showings.
Earlier this week, the National Association of Realtors said existing home purchases rose to an annual rate of 4.57 million January, the highest level since May 2010.