Sales of new single-family homes are up 1.5 percent in January to 661,000 units at a seasonally adjusted annual rate after a downward revision to 651,000 units in December. Sales are up 1.8 percent compared to 640,000 units in January 2023. The January reading is somewhat below the consensus of 685,000 units in the Econoday survey of forecasters. The pace of sales in January and December is supported by more moderate mortgage rates than had been the case since mid-2023 and by a lack of existing home stock.

The Freddie Mac average monthly rate for a 30-year fixed rate mortgage had a near term peak of 7.65 percent in October 2023, slipped to 7.44 percent in November, and further declined to 6.82 percent in December and 6.64 percent in January. However, mortgage rates are on the rise again toward the 7 percent mark and could put a chill on future sales.

The supply of new single-family homes available for sale is unchanged at 8.3 months in January from December, and only slightly above the 8.1 in January 2023. The median price of a new single-family home is up 1.8 percent to $420,700 in January from $413,100 in December, but down 2.6 percent from $432,100 in January 2023. Competition for homes in the existing market continues to drive some buyers to consider new construction, especially when there is a dip in mortgage rates that improves home affordability.

When the dip occurs, buyers will be willing to consider new construction at any stage of construction in order to lock in the more favorable rate. In January, 13 percent of buyers bought homes not yet started compared to 14 percent in December and 16 percent in January 2023. Homes under construction accounted for 44 percent of sales in January compared to 42 percent in December and 43 percent in January 2023. Completed homes accounted for 43 percent of sales in January 2024 and December 2023, and 42 percent in January 2023.

New home sales have been swinging sharply from month to month though December's rise to 664,000 from November's 615,000 was roughly close to the consensus. January's consensus is a sharp climb to 685,000.

New home sales measure the number of newly constructed homes with a committed sale during the month. The level of new home sales indicates housing market trends and, in turn, economic momentum and consumer purchases of furniture and appliances.

This provides a gauge of not only the demand for housing, but the economic momentum. People have to be feeling pretty comfortable and confident in their own financial position to buy a house. Furthermore, this narrow piece of data has a powerful multiplier effect through the economy, and therefore across the markets and your investments. By tracking economic data such as new home sales, investors can gain specific investment ideas as well as broad guidance for managing a portfolio. Each time the construction of a new home begins, it translates to more construction jobs, and income which will be pumped back into the economy. Once the home is sold, it generates revenues for the home builder and the realtor. It brings a myriad of consumption opportunities for the buyer. Refrigerators, washers, dryers and furniture are just a few items new home buyers might purchase. The economic"ripple effect" can be substantial especially when you think a hundred thousand new households around the country are doing this every month. Since the economic backdrop is the most pervasive influence on financial markets, new home sales have a direct bearing on stocks, bonds and commodities. In a more specific sense, trends in the new home sales data carry valuable clues for the stocks of home builders, mortgage lenders and home furnishings companies.