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Economic Report: New-home sales slump in January as weather, rising interest rates and COVID-19 impact demand

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The numbers: U.S. new-home sales decreased 4.5% to an annual rate of 801,000 in January, the government said Thursday. That figure represents the number of homes that would be sold over a yearlong period of time if the same number of properties were bought each month based on the rate of sales in January. Compared to a year earlier, sales were down more than 9.3%.

Economists polled by MarketWatch expected new-home sales in December to rise to an annual rate of 803,000.

The new-home sales report from the U.S. Census Bureau, unlike the existing-home sales report from the National Association of Realtors, records sales when the contract is signed rather than when the transaction has closed. The report’s small sample size means that it can be volatile and prone to large revisions.

What they’re saying: “High home prices have been a headwind to the housing market, and now steadily rising mortgage rates, a further drag on affordability, appear to be weighing on demand,” said Rubeela Farooqi, chief U.S. economist at High Frequency Economics, in a research note.

“We expect to see the inventory of homes available for sale begin to grow in 2022 from record-low levels as construction gives buyers new options, and existing homeowners venture into the housing market,” said Danielle Hale, chief economist at Realtor.com.

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