New Home Sales for January Well Below Initial Estimates
The sales volume of new single family homes in the United States fell from its ten month peak, according to a recent report from CNBC. This comes after the housing market in the West had declined significantly but the overall recovery of the market as a whole remains on track.
The pronouncement was made by the US Commerce Department, in a statement made last Wednesday where the sales volume had fell to a seasonally adjusted volume of 494,000 homes. This translates to a 9.2 percent drop, which was nearly as much as the gains made for December 2015. For the said month of December, sales pace was pegged at 544,000 houses.
Much of the change emanated from the current supply issues in the West, where prices had increased sharply due to low supply availability. The sales volume fell by 32.1 percent or reaching only a volume of 110,000 units. This was the lowest registered volume for the region since July 2014, while the volume decline was the biggest since May of 2010.
Despite the gloomy report, there are some areas where bright spots remain. According to a recent report from Yahoo Finance, recent economic data and corporate earnings show how robust the housing market is and will be in the coming years.
According to Johnny Bo Jakobsen, Nordea Markets Chief Analyst, "Home sales are at cycle highs, but the market still seems mainly to be dominated by supply constraints." He added, "Thus, at the current sales pace, it would take only four months to clear the supply of homes on the markets. This suggests that home prices generally still continue to rise at a solid pace."
Amongst those expecting a windfall due to the robust projections for the US housing market is Home Depot, the large home supplies chain. Home Depot CEO Craig Menear said that its US business continues to be bright. He said, "Turning to the macro environment, while 2016 concensus US GDP growth projections have moderated, we continue to see positive signs in the housing data, with home appreciation, housing turnover, and household formation being the key drivers of growth for our business."