AP Nation / World

Feb 24, 10:12 AM EST

US new-home sales rise in sign of housing market health

Painting Tips
Kid's Room Decor
How to Stage Your Home
Designing for Small Spaces
Tree Houses
Green Remodeling
Universal Design
Home Theater Basics
Home security products
Basement Renovations
How to Prep a Guest Room
Preparing your garden for winter
Go inside the smart home
Existing home sales interactive
Garage makeovers add value to homes
Keys to know when buying a condo
Real estate appraisal complaints
Trends in home offices
Baby-proofing your home
Latest bathroom trends
Latest trends in pools

WASHINGTON (AP) -- Americans bought more new homes in January after a steep fall-off the previous month, a sign the housing market is healthy despite higher mortgage rates.

New home sales rose 3.7 percent to a seasonally-adjusted 555,000, the Commerce Department said Friday. That is 5.5 percent higher than a year ago.

Solid job gains and some signs of rising wages have driven up consumer confidence, which has also risen since the presidential election. More confident consumers are more likely to buy homes. Sales of existing homes jumped to their highest level in a decade, according to data released earlier this week.

The solid sales have occurred despite, or perhaps because of, a jump in mortgage rates since the fall. Many buyers could be accelerating purchases to get ahead of any further rate increases.

Financial markets expect faster growth and higher inflation will flow from President Donald Trump's tax cuts and deregulation initiatives. That has pushed up interest rates on both the 10-year Treasury note and mortgages.

The average 30-year fixed mortgage rate was 4.16 percent this week, little changed from the previous week. Still, that is up sharply from an average of 3.65 percent all last year.

Low mortgage rates and a steady job market have helped the housing market recover from its bubble and bust cycle a decade ago. By some measures, home prices on average nationwide have returned to their pre-recession peaks.

Yet homeowners are carrying less debt and have more equity ownership of their homes now than during the bubble, reducing fears of a repeat.

A limited supply of homes available has helped push up prices, but there are signs that in the new home market builders may be addressing the problem.

There were 265,000 new homes for sale at the end of January, up nearly 11 percent from a year earlier and the most in nearly eight years.

Still, more home building is needed to address supply shortages. The number of existing homes on the market is near its lowest level since 1999.

© 2017 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. Learn more about our Privacy Policy and Terms of Use.