By Lucia Mutikani
WASHINGTON Feb 26 Sales of new U.S.
single-family homes surged to their highest level in 4-1/2 years
in January and the month's supply of houses on the market was
the smallest since March 2005, further evidence the housing
sector recovery is gaining muscle.
The Commerce Department said on Tuesday sales jumped 15.6
percent to a seasonally adjusted annual rate of 437,000 units,
the highest level since July 2008 when the economy was in the
throes of a recession.
The percentage gain was the largest since April 1993.
December's sales pace was revised up to 378,000 units from the
previously reported 369,000 units. Economists polled by Reuters
had expected sales to rise to a 381,000-unit rate last month.
In the 12 months through January, sales were up 28.9
The report was the latest to suggest the housing market was
gaining steam and getting positioned to take the baton from the
cooling manufacturing sector as the main driver of the economic
Demand for housing has been steadily rising and data last
week showed the number of previously owned homes on the market
in January was the lowest in 13 years, while permits for future
home construction hit a 4-1/2 year high.
The recovery in the sector is being supported by record-low
mortgage rates, which have been held down by the Federal
Reserve's ultra-accommodative monetary policy stance.
New home sales are lagging the overall housing market. But
with stocks of previously owned homes dwindling, demand for new
homes should pick up significantly. New homes account for about
8 percent of the overall market.
Last month, the inventory of new homes on the market was at
150,000 units, unchanged from December and not far from record
lows. This should encourage builders to continue breaking more
ground on homes.
At January's robust sales pace it would take 4.1 months to
clear the houses on the market, down from 4.8 months in
December. January's supply was the smallest in nearly eight
The median sales price for a new home rose 2.1 percent from
a year ago.
Sales last month were up in all four regions, surging 45.3
percent in the West and soaring 27.6 percent in Northeast.