* New single family home sales fall 7.0 percent in December
* Median sales price up 4.6 percent from year-ago period
* Number of houses sold in 2013 highest since 2008
* Private sector pushes ahead in early January
By Lucia Mutikani
WASHINGTON, Jan 27 Sales of new U.S.
single-family homes fell more than expected in December, but
lean inventories and steady price gains suggested the housing
market recovery remained intact.
Economists largely shrugged off the second straight month of
decline in sales, blaming frigid temperatures. Other data on
Monday showed an acceleration in services sector growth in
January, backing views of sustainable strength in the economy.
"It's cold out there for the economy. The drop in new home
sales is not a sign the economy at large is starting to slow in
a worrisome manner," said Chris Rupkey, chief financial
economist at Bank of Tokyo-Mitsubishi UFJ in New York.
The Commerce Department said new home sales fell 7.0 percent
to a seasonally adjusted annual rate of 414,000 units. Sales
were at a 445,000-unit pace in November and economists had
expected them to slow to only a 457,000-unit rate in December.
Apart from the bitterly cold weather, last month's decline
in sales was likely a continuation of the payback after
October's outsized 14.9 percent increase. Sales in the
Northeast, which was hard hit by cold temperatures, tumbled 36.4
percent to their slowest pace since June 2012.
Home sales are traditionally weak during the winter, but a
cold snap last month could have exaggerated the magnitude of the
slowdown. New home sales stumbled in the summer in the aftermath
of a spike in mortgage rates, but economists said a lack of
supply could also be curbing activity.
"There has been some pause in sales, some of that may be
supply-related rather than demand-related," said Samuel Coffin
an economist at UBS in New York. "If you look at the inventory
data for new and existing homes, they don't look consistent with
a big fall-off in demand."
Last month, the supply of houses on the market fell 2.8
percent to 171,000 units. That was the lowest since July.
At December's sales pace it would take five months to clear
the supply of houses on the market. That was up from 4.7 months
in November. A supply of six months is normally considered a
healthy balance between supply and demand.
Housing is expected to have contributed significantly to
economic growth last year, through residential investment and
rising home prices that have boosted the net worth of
households, allowing for greater discretionary spending.
PRIVATE SECTOR ACCELERATES
For the fourth-quarter, however, the contribution likely
moderated a bit from the July-September period.
The soft home sales pace combined with emerging markets
worries to push U.S. stocks down on Monday. The dollar was
little changed against a basket of currencies, while prices for
U.S. Treasuries pared earlier losses.
Separately, financial data firm Markit said its January
"flash" or preliminary services sector gauge rose to a
four-month high of 56.6 from 55.7 last month. A reading above 50
signals expansion in economic activity.
"U.S. service providers reported a busy January, providing
an important signal that the economy remains in good health at
the start of the year," said Markit chief economist Chris
"Growth of business activity picked up from the already
robust pace seen in December, and optimism about prospects for
the year ahead rose to one of the highest levels we've seen
since the financial crisis."
The solid Markit reading feeds into expectations for
stronger economic growth this year. That has economists
confident that the housing market will regain some lost ground,
even in the face of higher mortgage rates.
"We expect new home sales activity should pick up in the
coming year along with improving economic growth," said Mark
Vitner, a senior economist at Wells Fargo Securities in
Charlotte, North Carolina.
For all of 2013, a total of 428,000 new single family homes
were sold. That was the most since 2008 and represented a 16.4
percent increase from 2012.
The median price of a new home last month rose 4.6 percent
from December 2012. For the year as a whole, prices were up 8.4
percent, the most since 2005, with the median new home price
climbing to $265,800, the highest on record.