New home sales tumble 11.2%
Sales of newly built homes took an unexpected 11.2% tumble, falling to a record low in January, the government said Wednesday.
The drop put the seasonally adjusted annual rate of sales at 309,000 units in January, according to the Commerce Department. That was a 6.1% drop from January 2009. Economists surveyed by Bloomberg News had predicted sales would climb.
In the West, sales declined 11.9% in January from the prior month.
“So much for the trend of decent housing news!” Michael D. Larson, an interest rate and housing analyst at Weiss Research, wrote in a note to clients. “January’s new home sales figures were awful across the board. Fewer new homes were sold in this country than at any time since the Kennedy administration.”
The government said the median sales price of new houses sold in January 2010 was $203,500. The seasonally adjusted estimate of new houses for sale at the end of January was 234,000, representing a supply of 9.1 months at the current sales rate.
Politicians and policymakers in Washington have taken extraordinary measures to support the housing market. They have kept interest rates at rock-bottom levels and the supply of mortgages plentiful through the Federal Housing Administration. In November, Congress extended a popular tax credit of up to $8,000 for first-time buyers through April and expanded it to include up to $6,500 for some current homeowners.
But many experts fear that the housing market could be headed for another dip as some of these policies expire. The Obama administration has also worked to keep foreclosures off the market by trying to reduce the mortgage payments of troubled homeowners but has had trouble making that relief permanent for many borrowers.
-- Alejandro Lazo
Photo: New-home construction in Phoenix. Credit: Joshua Lott / Bloomberg News