New U.S. single-family home sales rose less than expected in January, likely held back by heavy rains and flooding in California, but continued to point to a strengthening housing market despite higher prices and mortgage rates.
Other data on Friday showed a dip in consumer sentiment this month, though it remained at a level consistent with a healthy pace of consumer spending. The economy has gained momentum, supported by a labor market that is near full employment.
“It is clear that the economy is moving forward solidly. Consumers are confident and are buying homes, but builders are not getting their share of that demand,” said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania.
The Commerce Department said new home sales increased 3.7 percent to a seasonally adjusted annual rate of 555,000 units last month. Economists had forecast single-family home sales, which account for about 9 percent of overall home sales, surging 6.3 percent to a 570,000-unit rate.
New home sales, which are derived from building permits, are volatile on a month-to-month basis and subject to large revisions. Sales were up 5.5 percent compared to January 2016.
Last month, homes sales soared 15.8 percent in the Northeast to their highest level since January 2008. They rose 14.8 percent in the Midwest and advanced 4.3 percent in the South. Sales in the West, which has been hit by extremely rainy weather, fell 4.4 percent.
“The unusually wet winter may have held back sales in January, but sales are still trending higher on a three-month moving average basis,” said Mark Vitner, a senior economist at Wells Fargo Securities in Charlotte, North Carolina.
Data this week showed sales of previously owned homes jumped 3.3 percent to a 10-year high in January. House prices increased 6.2 percent in December from a year ago.