According to analysts at Wells Fargo, New Home sales begin 2019 on a soft note but they look for and improvement. Data released today showed new home sales fell 6.9% in January while at the same time sales for prior 3 months were revised significantly higher.

Key Quotes:

“New home sales fell 6.9% in January to a 607,000-unit pace. Consensus estimates had called for a modest increase, as homebuilders had reported a rise in prospective buyer traffic earlier this year. Homebuilder confidence and consumer confidence have both rebounded, following the Fed’s monetary policy pivot.”

“Moreover, with mortgage rates about a half of a percentage point lower than they were in December, mortgage purchase applications have increased. Given the improvement in these advance indicators, we are looking for some improvement in new home sales as we move into the spring.”

"New home sales look set to improve this spring. In addition to the drop in mortgage rates, builders now have a little more inventory for prospective buyers to choose from. Builders currently have 336,000 homes available for sale, which equates to a 6.6-month supply. That is up from 295,000 units a year ago, or a 5.6-month
supply. About three quarters of that inventory is in the South and West, where the bulk of new homes are sold.”

Much of this new product is also available at lower price points. The median price of a new home was $317,200 in January, which is 3.9% lower than it was a year ago.”