New Home Sales Decline Again
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- Kara Johnson | March 24, 2010
Sales of new single-family homes fell for the fourth month in a row in February, with the annual rate dropping to an all-time low of 308,000, according to figures released today by the Commerce Department.
The news comes the day after the National Association of Realtors reported that sales of existing homes declined for the third consecutive month in February, as the housing market struggled through the winter despite signs of recovery in other sectors of the economy.
The February new-home sales rate represented a 2.2 percent decline from January’s upwardly revised rate of 315,000 units, and a 13.0 percent annual decline from the February 2009 rate of 354,000. Economists had expected a small improvement in February’s figures.
Prices rebound
Despite the decline, new home prices rebounded in February, with the national median sales price increasing to $220,500 from $207,500 in January. The January figures may have been an anomaly, however, as February’s figures represent a return to where they had held been in previous months. The Commerce Department cautions that its monthly figures are subject to significant sampling errors.
New home sales appeared to be recovering last summer, running at a fairly consistent annual rate of around 400,000 units from June through October, but then falling off sharply beginning in November. Many analysts attributed the drop to the scheduled expiration of a homebuyer tax credit at the end of November, but an extension and expansion of the credit by Congress has not provided the hoped-for boost, although the decline in existing sales nearly halted in February.
New home sales are suffering from a glut of inventory and stiff competition from heavily discounted exiting homes lost in foreclosure or surrendered through short sales. According to the Commerce Department, new homes purchased in February were on the market a median 14.4 months before being purchased.
Durable goods orders increasing
Despite the woes of the housing market, other sectors of the economy are showing modest improvement. Orders for durable goods, considered a key indicator of economic trends, increased for the third month in a row in February, rising a modest 0.5 percent according to other Commerce Department figures released today. That follows a 3.9 percent increase in January.
Orders for machinery posted the largest increase of any single category, up 4.7 percent for the third monthly increase in four months. New orders for nondefense capital goods were up 5.2 percent for the month.
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