New-home sales dropped almost 7 percent over the previous month in January, and decreased four percent annually, surprising industry experts amid recent growth in builder sentiment.
According to analysis of the Census Bureau's new sales data, the spring real estate season may decide how the nation's biggest builders fare in earnings and stocks this year, CNBC reports. Peter Boockvar, chief investment officer at Bleakley Advisory Group, says, "We all know that the pace of housing transactions has slowed to no growth as high home prices combined with higher mortgage rates froze behavior," adding, "Now with the latter seeing relief, the next few months are big in measuring the state of the industry and consumer taste for big-ticket, life-altering decisions."
The data on new home sales is volatile, according to the Census itself, and a three-month average puts sales at the highest level since June. Both sales and construction, however, are well below historical norms, and demand has been incredibly sensitive recently to interest rates. While builders report strong expectations for sales over the next six months, they are also reporting disappointing buyer traffic through their model homes.
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