WASHINGTON(Reuters) - Sales of new U.S. single-family homes fell slightly more than expected in January, likely as rising mortgage rates and higher prices sidelined some first-time buyers from the market.
New home sales fell 4.5% to a seasonally adjusted annual rate of 801,000 units last month, the Commerce Department said on Thursday. December's sales pace was revised higher to 839,000 units from the previously reported 811,000 units.
Sales dropped in the Midwest, Northeast and the densely populated South. But they rose in the West. Economists polled by Reuters had forecast new home sales, which account for more than 10% of U.S. home sales, falling to a rate of 806,000 units.
Sales tumbled 19.3% on a year-on-year basis in January.
They peaked at a rate of 993,000 units in January 2021, which was the highest since the end of 2006. Mortgage rates are near three-year highs.
The new housing market remains underpinned by a record-low inventory of previously owned homes. Demand for housing is expected to remain strong even as mortgage rates increase, which together with high prices will further erode affordability, especially for first-time buyers.
The median new house price in January increased 13.4% from a year ago to $423,300. There were 406,000 new homes on the market, up from 394,000 units in December.
Houses under construction made up 65% of the inventory, with homes yet to be built accounting for about 26%.
The backlog of homes approved for construction but yet to be started is at an all-time high as builders struggle with shortages and higher prices for inputs like softwood lumber for framing, as well as cabinets, garage doors, countertops and appliances.
At January's sales pace it would take 6.1 months to clear the supply of houses on the market, up from 5.6 months in December.