New-Home Sales Decline, but Indicators Index Rises

Winter weather took a heavier toll on new-home sales than expected in January, the government said Tuesday, but a separate measure showed the broader economy still packing a punch.

The Commerce Department said sales of new homes dropped 5% to a seasonally adjusted annual rate of 918,000--well below the 975,000-unit rate that Wall Street economists had forecast. The January decline came after a drop of 3.6% in December.

Mortgage rates have edged up recently, which may have put a damper on sales, but analysts said a steep slump in sales in the Midwest shows that winter probably played a role too.

Even with back-to-back monthly declines in December and January, new-home sales in January remained 8.3% above the pace of a year earlier. New-home sales hit a record million-a-month level last November.

Regionally, new-home sales rose 8% in the West during January but declined elsewhere.

Separately, the Conference Board, a private research group, said its index of leading economic indicators, a measure of future economic activity, rose 0.5% in January after a 0.2% gain in December, underlining the durability of the economic expansion. The December gain is a revised figure; it had previously been reported as 0.3%.

The group said its report points to economic growth continuing at least through mid-1999 and that signs of any imbalances that could jeopardize economic growth “remain relatively subdued.”

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New-Home Sales

Seasonally adjusted annual rate, in thousands of units:

January: 918,000