• New home sales fell 0.2 percent in January, according to the U.S. Census Bureau, to 481,000 (SAAR).
• The median price of new homes sold in January edged down 0.1 percent to $299,100, the second consecutive month of lower prices.

New home sales fell 0.2 percent in January, to 481,000 at a seasonally-adjusted annual rate (SAAR), a smaller than expected dip, but a decline nevertheless. December’s surprisingly strong sales data was also revised slightly upward, to 482,000 units (SAAR).

Zillow expected a drop of 1.5 percent, and the market consensus forecast was for a drop of 2.3 percent (figure 1).

The median seasonally-adjusted price of new homes sold in January fell 0.1 percent, to $299,100, the second consecutive month of declining prices after December’s 1.2 percent drop. However, the median price of new homes sold remains 9 percent above its year-ago level. New home prices have now posted year-over-year increases in all but three of the past 36 months. After retreating somewhat from highs recorded in the period immediately following the recession, the pace of annual price increases has stabilized around 7 percent over the past ten months (figure 2).

As we have discussed, new home construction during the recovery has skewed toward higher-end homes as builders have seemingly opted for a business strategy centered on lower volumes and higher prices. Many expect this will begin to change in 2015, with builders gradually moving toward more modestly priced market segments. But one month into 2015, there’s not a lot of evidence pointing in that direction, although the 2015 building season has yet to really get underway.