By Vicki Needham - 01/27/14 12:50 PM EST
New home sales fell 7 percent in December but builders remain upbeat because sales for the year grew by double digits.
Overall, sales fell last month to seasonally adjusted annual rate of 414,000 but were up 16.4 percent last year, according to the Housing and Urban Development and Commerce departments figures released on Monday.
"December's decline in new-home sales follows elevated levels in the previous two months and means the fourth quarter was still much stronger than the third," said Rick Judson, chairman of the National Association of Home Builders (NAHB) and a home builder from Charlotte, N.C.
Builders expect that, despite a series of nagging hurdles — tight credit, limited labor supply and buildable lots — growth in the housing sector will continue this year.
"Consumers are getting used to more realistic mortgage rates, which still remain favorable on a historical basis," said David Crowe, NAHB's chief economist.
"As household formations and pent-up demand continue to emerge, we anticipate that 2014 will be a strong year for housing."
Regionally, new-home sales fell in three of four areas.
Sales dropped sharply, by 36.4 percent, in Northeast, which has been hit by repeated snow storms, and were down 7.3 percent in the South and 8.8 percent in the West. The Midwest posted a 17.6 percent gain.
Meanwhile, the inventory of new homes fell to 171,000 units in December, which is a five-month supply at the current sales pace.
The median sales price of new houses sold was $270,200 and the average sales price was $311,400.