There was a drop in sales of new homes nationwide in January with a seasonally-adjusted rate of 593,000 units sold, down 7.8% year-over-year.
Data from the HUD and Commerce Department shows that inventory of new homes was 301,000 in the month, a 6.1-month supply at the current sales pace.
“The moderation in new home sales may be attributable to the interest rate environment, which could be causing short-term market volatility,” said NAHB senior economist Michael Neal. “However, the underlying economic fundamentals for housing demand remain strong and we expect more prospective home buyers to enter the market in 2018.”
The Northeast saw new home sales plummet 33.3% and Tendayi Kapfidze, chief economist at LendingTree says the recent tax changes have made an impact already.
“States in the Northeast such as New Jersey, New York and Connecticut are among the most vulnerable to the new tax law. The share of sales in the NE was just 4%, the third lowest since the financial crisis. The NE has averaged 6.1% of sales over the past 5 years,” he said.
The median sales price of new houses sold was $323,000 and Kapfidze says higher-priced homes saw the largest pullback; with those above $500K making up just 16% of sales, down from the previous month.
“In December sales above $500,000 were 22% of sales, the highest proportion since the sales price breakout began in 2002,” he said. “This included homes above $750,000 at a high of 7% of sales. Buyers may have rushed into these properties to have their mortgages grandfathered under the old mortgage deduction limits.”