New Home Sales in U.S. Increase, Prices Drop

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New home sales in the U.S. increased in January, providing a breath of fresh air to the easing housing market recovery.

The sales of new single-family homes were at a seasonally adjusted annual rate of 468,000 in January, increasing 9.6 percent from the revised December rate of 427,000, according to the Census Bureau.

The increase follows a seven percent monthly drop in December. January home sales were 2.2 percent higher than the January 2013 estimate of 458,000.

The housing market recovery has lost some momentum in the last couple of months, due to rising home price, increasing interest rates and severe weather conditions throughout the country.

Today the Mortgage Bankers Association reported the mortgage applications purchase index dropped to the lowest level since 1995. Last week the National Association of Realtors reported existing-home sales dropped to an 18-month low.

However, going forward, the market may witness an increase in sales as home price growth is losing momentum.

In today's report, the Census Bureau shows the median sales price of new homes was $260,100 in January, dropping from $270,000 in December.

The seasonally adjusted estimate of new homes for sale at the end of January was 184,000, representing a supply of 4.7 months at the current sales rate.