Dive Brief:

• New single-family home sales in January rose 3.7% from December's adjusted rate of 535,000 to a seasonally adjusted annual rate of 555,000, the Commerce Department reported Friday. The rate is 5.5% above the year-ago estimate of 526,000.

• January's figures came in below analyst expectations, with economists polled by MarketWatch calling for an annual rate of 586,000 sales.

• The median sales price of new houses sold in January was $312,900, down from $322,500 in December and $305,400 in November. The supply of new homes dipped marginally to 5.7 months in January from 5.8 months in December.

Dive Insight:

January's report follows a downturn in December that had industry observers concerned that tight inventory conditions were stymying growth. Despite month-to-month volatility in the market, observers are hopeful that the uptick in new-home sales could signal a solid start to 2017.

Inventory, however, remains an issue. Existing-home sales were ahead 3.3% on a monthly basis and 3.8% year-over-year in January, while for-sale stock in that category fell for the 20th-consecutive month. For its part, new single-family construction is coming back online, albeit slowly. The category inched up 1.9% in January to an annualized rate of 823,000 starts and was 6.2% of the year-ago period, according to the latest figures from the Commerce Department.

Still, a shortage of lots and labor, rising mortgage rates and elevated home prices are the counterweight on forecasts of growth in the residential construction sector. Builder confidence lagged for a second-straight month, according to the National Association of Home Builders/Wells Fargo Housing Market Index, though economists say the measure is moving back into a sustainable range following a post-election surge.

As for activity in the coming months, industry observers look to a recent uptick in building permit authorizations to bring confidence back to the market. With January's slight rise in authorizations and new single-family construction, economists project that 2017's slow start could turn around.

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