U.S. new-home sales jumped in January from the previous month to the highest level since July 2008, a sign that the housing recovery is accelerating.
The Commerce Department said Tuesday that new-home sales rose nearly 16 percent in January to a seasonally adjusted annual rate of 437,000. The percentage increase was the largest in nearly 20 years. And December's sales were revised higher to 378,000 from 369,000.
Steady job creation and near-record-low mortgage rates are spurring more Americans to buy houses. Sales of previously occupied homes rose to the highest level in five years last year.
At the same time, the number of previously occupied homes for sale is at a 13-year low. That shortage creates more demand for new homes. Builders began construction on the most houses and apartments in four years last year.
The supply of new homes for sale was unchanged last month at 150,000. That's barely above August's total of 143,000 — the smallest supply of new homes on records dating back to 1963.
At the current sales pace, it would take just 4.1 months to exhaust the number of new homes for sale, the lowest in eight years. Low inventories should encourage more construction.
Though new homes represent less than 20 percent of the housing sales market, they have an outsize impact on the economy. Each home built creates an average of three jobs for a year and generates about $90,000 in tax revenue, according to data from the National Association of Homebuilders.
The increase in home building has helped boost construction hiring. The industry has gained 98,000 jobs since September, the best stretch since the spring of 2006.
Still, the increases in new-home sales are coming from depressed levels. Sales plummeted to a record low in 2011. And sales are still well below the 700,000 annual level that economists consider healthy.
The biggest gain in new-home sales was in the West, where they soared 45.3 percent. The supply of previously occupied homes in that region has fallen sharply. Sales jumped 27.6 percent in the Northeast, 11.1 percent in the Midwest but only 3.2 percent in the South.
A separate report Tuesday showed that home prices accelerated in December. The Standard & Poor's/Case-Shiller 20-city home price index rose 6.8 percent in December compared with the same month a year earlier. That's up from November's 5.5 percent gain over the previous November.
Rising home prices can fuel the housing recovery by encouraging people to buy before prices increase further. They can also bring more sellers off the sidelines.
Higher home values also make homeowners feel wealthier, building confidence and encouraging more spending. And banks are more likely to provide mortgage loans if they are confident that home prices are rising.
© Copyright 2015 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.