New-Home Sales Slide

Sales of new single-family homes fell 5% in January despite unusually warm weather and favorable mortgages rates.The U.S. Census Bureau reported that new-home sales fell from a seasonally adjusted annual rate of 1.30 million in December to a 1.23 million rate in January. The December number was revised upward from 1.27 million. "We are down 5% from a really high level of home sales," said Freddie Mac chief economist Frank Nothaft, who predicts that strong economic growth in the first half will keep home sales at a high level. He is forecasting that sales of new and existing home will decline by only 4% from last year's record pace. Global Insight economist Patrick Newport said a drop in sales was a "bit of a surprise," since January was the warmest in 100 years. Looking at a three-month moving average, "demand for new homes is down and falling, though sales remain at historically high levels," Mr. Newport said. Global Insight is forecasting that the housing slowdown will be gradual and will take place over the next three to four years.