• New home sales rose 4.3% in January from the prior month, much stronger than market expectations
• The supply of new single-family homes for sale in January was 4.0 months, slightly down from 4.1 months in December
• Housing data is likely to cool in the near-term due to extreme weather conditions, but residential housing will remain strong in 2021 

Sales of new single-family homes rose 4.3% in January to 923,000 at a seasonally-adjusted annualized rate, much stronger than market expectations for an increase of 856,000. Sales increased from the upwardly revised 885,000 in December. Sales rose in three of the four regions of the country; sales were up 12.6% in the Midwest, up 3.0% in the South and up 6.8% in the West; sales were down 13.9% in the Northeast.

The supply of new homes was 4.0 months at the current sales pace in January, slightly down from the downwardly revised 4.1 months in December. The median sale price for an existing single-family home was $346,400 in January, down from $353,100 in December. This was a decrease of 1.9% over the month but a 5.3% increase from one year earlier. The average sales price for an existing single-family home was $408,800 in January. Sales of new single-family homes are now 28.9% above the pre-pandemic level.

The residential housing rebound has been supported by extremely low mortgage rates, the concentration of job-losses in lower-paying occupations, which left higher-income households who are more likely to be homebuyers relatively unscathed, and excellent consumer balance sheets. Housing supply has been constrained for many years; current supply challenges are likely due to surging homebuilding costs and a lack of developable land in some parts of the country, particularly the West and Northeast. Extreme weather conditions will likely cool housing data in the near-term but solid demand fundamentals should keep residential housing strong in 2021. PNC expects residential construction to continue to improve into 2021, boosting the overall economy.