By Sharon Nunn 

WASHINGTON -- Two months of steep declines in sales of new homes across the U.S. haven't persuaded many economists that the housing market is turning lower.

Purchases of newly built single-family homes -- a relatively narrow slice of all U.S. home sales -- fell 7.8% in January after dropping 7.6% in December, according to data released Monday by the Commerce Department. Purchases have declined for four of the past six months.

The January drop bucked the 4.0% growth economists surveyed by The Wall Street Journal had expected. Analysts are pointing to weather and the volatile nature of the new-home sales data to explain away what could be seen as an emerging downtrend in the housing market.

"If the drop in January were related primarily to economic factors, it is likely that all regions would have experienced declines," Nationwide chief economist David Berson said.

Instead, the declines were concentrated in the Northeast and South. Winter weather, particularly in Southern states, might have kept prospective buyers from the search, some economists said.

"Weather likely played a factor in new home sales falling for the second straight month in January," T.J. Connelly, head of research at Contingent Macro Advisors, said in a note to clients. "The Northeast and the South saw sharp declines, while the West and Midwest, where weather was better, saw gains."

Regardless of the weather's impact on home buyers, the numbers themselves tend to be unreliable in the short term. New home sales data produced by the Commerce Department are highly volatile, with large statistical margins of error, and subject to extensive revisions months after initial data are released.

"The national and all four regional sales estimates were statistically insignificant," said Patrick Newport, IHS Markit executive director for U.S. economics. Given the large margins of error, he noted, it is uncertain whether there was even an increase or decrease for the month.

Still, there are reasons to be on the watch for softness in sales data. Last year's tax overhaul made it more expensive to live in some high-cost areas, including the Northeast, and to take out big mortgages.

Mortgage rates have moved higher rapidly since the beginning of 2018, making purchasing a home more expensive. Moreover, housing inventory has been tight, driving up home prices and pricing some potential buyers out of the market. In January, sales of previously owned homes, which represent the bulk of the U.S. market, experienced their sharpest year-over-year drop in more than three years.

But inventory might be turning. In January, at the current sales pace, new-home supply reached 6.1 months, the highest level since the middle of 2014. That could ease upward pressure on prices.

Home builders' future expectations of single-family home sales rose to the highest level since the peak of the housing bubble, according to the National Association of Home Builders, suggesting new-home sales could pick up in the coming months.

"Given mixed trends in other housing data and affordability issues, this trend in new homes bears watching into the spring and summer months," Mr. Connelly said.

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Write to Sharon Nunn at sharon.nunn@wsj.com

(END) Dow Jones Newswires

March 21, 2018 12:34 ET (16:34 GMT)