New home sales data is known to be volatile. It is often revised and can sometimes show exaggerated increases and declines. But while the most recent release from the U.S. Census Bureau and the Department of Housing and Urban Development shows a nearly 18-percent drop in January, this one was likely due to harsh winter weather during the month, rather than a statistical anomaly that will be corrected in the weeks ahead. Why? Well, much of the country saw frigid temperatures and snow in January – which would naturally bring down the number of buyers actively looking at homes. The other reason we know the drop was likely weather-related, rather than due to a lack of interest from home shoppers, is the fact that affordability conditions have actually improved and, in January, rates were favorable and inventory was up for that time of year. Typically, those conditions would lead to a bump in buyers rather than a double-digit decline. (source)
