New U.S. single-family home sales tumbled in January from a 10-month high as sales in the West region plunged, but the overall housing market recovery remains intact.
The Commerce Department said on Wednesday sales dropped 9.2 percent to a seasonally adjusted annual rate of 494,000 units, almost unwinding December’s sharp increase. December’s sales pace was unrevised at 544,000 units.
Economists polled by Reuters had forecast new home sales, which account for about 8.3 percent of the housing market, slipping to a 520,000 unit-rate last month.
Sales in the West, which has seen a sharp increase in home prices amid tight inventories, plummeted 32.1 percent to a 110,000 unit-rate, the lowest level since July 2014. The percent decline was the largest since May 2010.
Sales rose 3.4 percent in the Northeast, despite a blizzard in late January. They fell 5.9 percent in the Midwest and rose 1.8 percent in the populous South.
Though the new homes market appears to have cooled, with construction activity falling in January and homebuilder sentiment softening in February, housing in general remains supported by a tightening labor market, which is lifting wage growth and bolstering household formation.