After High, New-Home Sales Drop Sharply
New single-family home sales dipped 12.6 percent in January to a seasonally adjusted rate of 284,000 homes, marking one of the sector’s worst years in half a century, according to the Commerce Department’s latest new-home sales report, released Thursday.
Analysts say new-home sales were particularly pulled down by a drop in activity in the West, mostly due to the ending of a home buyer tax credit for new homes in California. Sales in the West dropped 36.5 percent in January, after jumping 62.5 percent the month prior.
Overall, new-home sales were down 18.6 percent compared to January 2010. The median sales price for a new home dropped 1.9 percent from December to $230,600. Compared to last January, the median price still was up 5.7 percent.
The drop in January new-home sales follows last month’s unexpected surge in December new-home sales, which had risen to some of their highest levels in eight months (325,000 unit annual rate) and in which prices were at the highest since April 2008. Economists had viewed last month’s gains as a significant step in stabilizing the new-home market, which has faced lows the past five years.
New-home sales remain at about half the 600,000 a year pace that economists view as healthy.
New-home sales continue to feel pressure from the glut of foreclosed homes on the market, analysts say. Meanwhile, foreclosures and all-cash deals drove up existing-home sales in January, the National Association of REALTORS® reported this week.
Source: “U.S. New Home Sales Drop 12.6% in January,” Reuters News (Feb. 24, 2011) and “New-home Sales in January Drop Sharp 12.6% as U.S. Housing Sector Falters,” Associated Press (Feb. 24, 2011)