Sales of newly built, single-family homes rose 15.6 percent to a seasonally adjusted annual rate of 437,000 units in January, according to newly released figures from the U.S. Department of Housing & Urban Development (HUD) and the U.S. Census Bureau. Amidst this quickened sales pace—the fastest since July of 2008—the months' supply of new homes for sale fell to its lowest level in nearly eight years.
"The surge in demand for new homes this January is an excellent sign that the housing recovery is gaining steam and helping put more people back to work," said Rick Judson, chairman of the National Association of Home Builders (NAHB) and a home builder from Charlotte, N.C. "While we can't expect to see double-digit sales growth every month, consumers are definitely coming off the fence as prices start to rise, and builders in some cases are having a tough time keeping up. Challenges related to credit availability, poor appraisals, dwindling lot supplies, spot shortages of skilled labor and rising materials costs are all weighing on the recovery process."
New-home sales posted solid gains across every region in January, including a 27.6 percent increase in the Northeast, an 11.1 percent gain in the Midwest, a 3.2 percent gain in the South and a 45.3 percent gain in the West.
"Today's report shows a strong revival in new-home sales across all regions of the country and bodes well for the upcoming spring buying season," said NAHB Chief Economist David Crowe. "That said, the razor-thin supply of new homes for sale is very concerning at a time when we are only about half-way back to what could be considered a 'normal' level of activity. Builders need to be able to refresh their inventories to keep the momentum going."
The inventory of new homes for sale held unchanged at a relatively meager 150,000 units in January. This amounts to a 4.1 months' supply at the current sales pace - the smallest months' supply since March of 2005.