Sales of New Homes Fell
By 5% During January

New-home sales fell for the fourth time in six months during January, while the inventory of new residences on the market climbed to another record.

The Commerce Department said Monday that sales of single-family homes decreased 5% to a seasonally adjusted annual rate of 1.233 million, from a rate of 1.298 million during December. Sales dropped 7% in November, rose 7.7% in October, and sank 2% in September and 7.1% in August.

"Demand for new housing has passed its peak and is slowly retreating," Steven Wood of consulting firm Insight Economics wrote in a research note.

The decline in sales came as builders broke ground on new dwellings at a feverish pace. Home construction climbed 14.5% to a 33-year high last month, according to an earlier report from the Commerce Department, amid the warmest January on record in the U.S.

With sales falling and starts climbing, there were an estimated 528,000 homes for sale at the end of January, a record level that represented a 5.2 months' supply at the current sales rate. In December, an estimated 515,000 new homes were for sale, a 4.8 months' inventory. An estimated 93,000 homes were actually sold last month.

Despite that imbalance, the median price of a new home was up in January to $238,100, compared with $229,000 in December, and the highest since an all-time high of $243,900 set in October. The average price of a home increased to $291,600, up from a revised $281,700 in December.

Mortgage rates moved higher in the final quarter of 2005, crossing the 6% mark. The average 30-year fixed-rate mortgage was at 6.15% in January, according to Freddie Mac, down from 6.27% in December but higher than the 5.71% average rate in January 2005.

Regionally, sales fell 10.8% in the Midwest, 14.9% in the Northeast, and 10.3% in the South. Sales climbed 11.3% in the West.

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