Implications:  New home sales rose in January, although not quite as fast as the consensus expected.  Sales increased 3.7% in January and are now up 5.5% versus a year ago, illustrating the "fits and starts" recovery of the past several years.  Using the 12-month moving average to cut through the volatility shows the upward trend in sales remains intact.  Meanwhile, despite a 9,000 increase in unsold new homes, inventories remain low by historical standards (see chart to right) and are not a headwind to future construction.  Most of this gain in inventories in January was due to homes where construction has yet to start.  Going forward, we expect housing to remain a positive factor for the economy.  First, employment gains continue which should put upward pressure on wage growth.  Second, the mortgage market is starting to thaw.  Third, the homeownership rate remains depressed as a larger share of the population is renting, leaving plenty of potential buyers as economic conditions continue to improve.  Unlike single-family homes which are counted in the new home sales data, multi-family homes (think condos in cities) are not counted.  So a shift back toward single family units will also serve to push reported sales higher.  Look for overall gains in home sales in the year ahead as these factors combine to drive expansion, and any headwind created by an increase in mortgage rates is offset by expectations of faster future economic growth.  In other recent housing news, the FHFA Index, which measures prices for homes financed with conforming mortgages, increased 0.4% in December and was up 6.2% in 2016, the second fastest increase for any calendar year since 2005.  More broadly, new claims for unemployment insurance increased 6,000 last week to 244,000.  Continuing claims fell 17,000 to 2.06 million.  It's still early, but plugging these figures into our models suggests a nonfarm payroll gain of about 195,000 for February, which would boost the odds of a March rate hike.

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