A worker installs a window in a new home under construction at a housing development September 27, 2007 in Richmond, California

Photo: Justin Sullivan/Getty Images

January new home sales surged 15.6 per cent month-over-month, to an annual rate of 437K.This crushed expectations for a 3 per cent rise, to an annual rate of 380K.

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The median sales price of new homes in January was $226, 400.

The seasonally adjusted estimate of new homes for sale at the end of January was 150,000. It would take 4.1 months to sell the supply at the current sales pace.

Meanwhile, last month’s reading was revised up to reflect -3.8 per cent month-over-month decline to an annual rate of 378K. This compares with the initial reading of 7.3 per cent decline to 369K. The time taken to clear supply in December was 4.8 months at the current sales pace.

This indicator measures the number of newly constructed homes with a committed sale during the month. It offers insight into the broader economy since new homes often have a ripple effect on the economy, and consumer spending. It also gives us a broader picture of housing demand.

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