Cold snap freezes house sales in the US

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Sales of new US single-family homes fell more than expected in December, but lean inventories and steady price gains suggested the housing market recovery remained intact.

Economists largely shrugged off the second straight month of decline in sales, blaming frigid temperatures.

Other data yesterday showed an acceleration in services sector growth in January, backing views of sustainable strength in the economy.

“It’s cold out there for the economy. The drop in new home sales is not a sign the economy at large is starting to slow in a worrisome manner,” said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ in New York.

The Commerce Department said new home sales fell 7.0 per cent to a seasonally adjusted annual rate of 414,000 units. Sales were at a 445,000-unit pace in November and economists had expected them to slow to only a 457,000-unit rate in December.

Apart from the bitterly cold weather, last month’s decline in sales was likely a continuation of the payback after October’s outsized 14.9 per cent increase. Sales in the north east, which was hard hit by cold temperatures, tumbled 36.4 per cent to their slowest pace since June 2012.

Home sales are traditionally weak during the winter, but a cold snap last month could have exaggerated the magnitude of the slowdown.

New home sales stumbled in the summer in the aftermath of a spike in mortgage rates, but economists said a lack of supply could also be curbing activity.