For February, 2014

US sales of new homes up in January

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U.S. sales of new homes rebounded in January to the fastest pace in more than 5 years, offering hopes that housing could be regaining momentum after a slowdown last year caused by rising interest rates.

Sales of new homes increased 9.6% in January to a seasonally adjusted annual rate of 468,000. That was the fastest pace since July 2008.

Sales had fallen 3.8% in December and 1.8%t in November, leading to worries that the housing recovery could be losing momentum.

The median price of a new home sold in January was up 3.4% from a year ago to $260,100.

The sales gain was led by a 73.7% surge in sales in the Northeast. Sales were up 11% in the West and 10.4% in the South. The only region to see a sales decline was the Midwest where sales fell 17.2%.

Sales for all of 2013 rose to 428,000, the highest point in five years and an increase of 16.3% from 2012.

Economists expect sales to grow more in 2014 although they do not expect the gain to be as robust as the 2013 increase.

Price increases are expected to moderate in 2014 as well. The Standard & Poor’s/Case-Shiller 20-city home price index rose by a healthy 13.4% in last year. That was the largest calendar gain in eight years.

The National Association of Realtors reported last week that sales of existing homes plummeted in January to an annual rate of 4.62 million units. That was down 5.1% from the December pace.

The average rate on a 30-year mortgage rose to 4.33% last week, up from 4.28& the previous week. Rates surged about 1.25% points from May through September, peaking at 4.6%.

The economy is also expected to show greater strength with many analysts expecting overall growth to climb to close to 3% this year, up from just 1.9 percent in 2013.

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