This story was originally published in Builder.

Sales of new single-family houses in January 2018 fell 7.8 percent from December to a seasonally adjusted annual rate of 593,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. The rate was 1 percent below the January 2017 estimate of 599,000.

The median sales price of new houses sold in January 2018 was $323,000, down from $336,700 in January but up from $315,200 in January, 2017. The average sales price was $382,700, down from $394,600 in December but ahead of $357,700 a year earlier.

The seasonally adjusted estimate of new houses for sale at the end of January was 301,000. This represents a supply of 6.1 months at the current sales rate.

LendingTree chief economist Tendayi Kapfidze put out a research note on the decline, saying rising mortgage rates may be starting to affect the market. "NHS data is always messy. NHS are amongst the most volatile and revision prone economic data series," he wrote. "At LendingTree we prefer to look through some of this by considering the 3-month average to balance timeliness with information value. The 3-month average of 644,000 is at the third highest level since the financial crisis.

He continued: "States in the Northeast such as New Jersey, New York and Connecticut are among the most vulnerable to the new tax law. The share of sales in the NE was just 4 percent, the third lowest since the financial crisis. The NE has averaged 6.1 percent of sales over the past 5 years. ... High priced homes fall back. Homes above $500,000 fell back to 16 percent of sales in January. In December sales above $500,000 were 22 percent of sales, the highest proportion since the sales price breakout began in 2002. This included homes above $750,000 at a high of 7 percent of sales. Buyers may have rushed into these properties to have their mortgages grandfathered under the old mortgage deduction limits."

Kapfidze then concluded: "The tax plan presents some opportunities. The reduction in corporate taxes and other real estate developer friendly tax breaks should increase builder profit margins by 10 to 20 percent. This will increase the incentive to build more homes, especially at lower prices where new supply has been lacking due to small profit margins."

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