New US home sales fell in January but upward revisions to the previous months' data and a drop in the supply of properties on the market added to signs of a budding housing recovery.
In a further boost to the economy, a separate report today showed US consumer confidence hit its highest point in a year this month despite a strong rise in petrol prices.
The US Commerce Department said sales of new single-family homes slipped 0.9% last month to a seasonally adjusted 321,000-unit annual rate. However data for October, November and December were revised to show a much higher sales pace than previously reported, giving the report a stronger tone and putting January's figure above economists' expectations.
Sales last month rose briskly in the Northeast and South but fell sharply in the Midwest and the West.
A slew of recent data has led economists to lay aside concerns that the US economy would slow abruptly at the start of this year. The US unemployment rate hit a three-year low last month, manufacturing has picked up and the housing sector is stirring.
The brighter economic signs have helped lift the spirits of US households. The Thomson Reuters/University of Michigan's final index of consumer sentiment in February edged up to 75.3, the highest since February last year, from 75 in January.
The rise in confidence came even as Americans faced higher prices for petrol. Prices have jumped 8.8% since the start of this year, according to the Energy Information Agency, topping an average of $3.65 a gallon in the week until Monday.
Meanwhile, the Obama administration is weighing the circumstances that could warrant tapping the nation's strategic oil reserve, aware that supply disruptions from Iran could harm the global economy, Treasury Secretary Timothy Geithner said today.
"There is a case for the use of the reserve in some circumstances and we will continue to look at those and evaluate that carefully," Geithner said on CNBC television.
Economists expect the pain at the pump to be mitigated by falling natural gas prices and do not anticipate a repeat of 2011 when spiking petrol prices almost tipped the economy back into recession.
Despite the drop in new homes sales last month the supply of homes on the market fell to 5.6 months - the lowest since January 2006 - from 5.7 months in December. A six month supply is generally considered an ideal level and the decline last month suggested the supply-demand situation in the new homes market was coming into better balance.
The inventory of new homes on the market was the lowest on record. But new home sales face stiff competition from second hand homes, which represent a much larger share of the market. Many are selling at a huge discount because of repossessions.
The average price for a new home in the US rose 0.3% last month to $217,100, the highest since October. It was the second month of gains in a row. Compared to January last year, however, the average price was down 9.6%.
Economists are optimistic the downward pressure on home prices is set to ease, encouraged by recent declines in the supply of unsold previously owned homes, which fell to a near six-year low of 6.1 months in January.
