New US homes continued to sell at a brisk pace in January, with sales hitting the highest level since July 2007 as builders struggled to keep pace, according to government data released Wednesday.
The better-than-expected results in the Census Bureau report showed the jump in new home sales that began last year had not tapered off in the first month of 2020, sending prices spiking.
Sales of single-family homes jumped in to an annual rate of 764,000, seasonally adjusted, an increase of 7.9 percent from December 2019, according to the report.
Almost all regions of the United States saw a month-on-month increase, particularly the Midwest, where sales jumped 30.3 percent, and the West, where they rose by 23.5 percent.
The sole exception was the South, which saw a decline of 4.4 percent.
"We expected an overshoot, thanks to the extremely mild winter weather across much of the country, but this report is even better than we expected," Ian Shepherdson of Pantheon Macroeconomics said in an analysis.
December 2019 sales were also revised upwards, and builders seemed unable to cope with demand: the inventory of new homes available for sale dropped in January from 5.1 months compared to 5.5 months in December and 6.5 months in January 2019.
The constrained supply sparked a particularly sharp rise in the median sale price, which soared to $348,200, a jump of 14 percent compared to January of last year.
"The jump was due partly to a shift in the composition of sales toward higher-priced homes. Homebuilders have been reducing the sizes of new homes to appeal to younger buyers with more moderate incomes, but there is probably still a lack of supply at lower price points," Oxford Economics wrote in a note.
Hanging over the data is the outbreak of the COVID-19 that has infected 80,000 people worldwide, led to back-to-back routs on Wall Street and prompted US public health authorities to urge Americans to develop plans to avoid mass gatherings.
"The bottom line here, though, is that the housing market is in great shape, with further gains ahead -- COVID-19 permitting -- and price increases likely to pick up pace," Shepherdson said.