New home sales hit record low in February
If you were looking for evidence of a housing market recovery you didn't find it in the economic reports released this week.
On Wednesday, the government reported that new home sales sank a whopping 16.9% from January. The seasonally adjusted annualized rate of 250,000 was the lowest on record and 28% below the February 2010 estimate, the Commerce Department said.
Demand for housing remains weak with unemployment still high, according to real estate agents and economists. New-home builders, in particular, face competition from foreclosure properties.
What’s more, according to IHS Global Insight economist Chris G. Christopher Jr., builders are facing spikes in commodity prices, which add to their costs.
“The market for new homes has been stuck at the bottom for nearly two years and this report is not good news,” Christopher wrote in a research note Wednesday morning. “The new and existing housing markets are in a very precarious situation. Prices and sales are falling; inventory is increasing.”
The estimated number of homes for sale on the market was 186,000 in February. That represents a supply of just under nine months. Economists typically consider a supply of about six months healthy.
Regionally, sales fell 57.1% in the Northeast, 27.5% in the Midwest, 6.3% in the South and 14.7% in West.
The report on new home sales follows a report Monday from the National Assn. of Realtors showing sales of previously owned homes dived 9.6% in February.
-- Alejandro Lazo
Photo: Construction continues on condominiums in Cranberry, Pa. (AP Photo/Keith Srakocic).