New home sales fell 1% in January after rising four straight months, according to new government figures released Friday morning.
The Census Bureau reported that sales of newly built homes fell to a 321,000 seasonally adjusted annual rate in January from a 324,000 rate in December.
But the December rate was revised upward by 20,000 units, making January's performance better than expected.
Analysts at JPMorgan Chase had forecast that new home sales would increase 2.6% from December to a 315,000 rate in January. JPM senior economist Robert Mellman called the December sales "unusually high” but did not attribute the performance to the mild winter most parts of the country have enjoyed.
Mellman said the upward trend during the past few months reflects the general improvement in the economy and labor markets. The economist expects sales will "gradually get better" this year, but noted that activity is coming off of historically low levels. "I think we are starting to climb out of the basement,” he said.
The JPM managing director pointed out that most housing data is improving but the number of mortgage applications has been flat. "That is a little puzzling," Mellman said.
Nevertheless, homebuilders are more upbeat and he expects new home sales will trend higher. "I am not so sure" about existing home sales, he added.
