Sales of new homes plunged to a record low in January, underscoring the formidable challenges facing the US housing industry as it tries to recover from the worst slump in decades.
The Commerce Department reported yesterday that new home sales dropped 11.2 per cent last month to a seasonally adjusted annual sales pace of 309,000 units, the lowest level on records going back nearly a half century. The big drop was a surprise to economists who had expected sales would rise about 5 per cent over December’s pace.
The January decline will heighten fears about the fledgling recovery in housing. Economists were already worried that an improvement in sales in the second half of last year could falter as various government support programmes are withdrawn. The sales decline in January marked the third-straight monthly drop following decreases of 3.9 per cent in December and 9.5 per cent in November.
The drop in sales pushed the median sales price down to US$203.500.
That was down 5.6 per cent from December’s median sales price of US$215,600, and off 2.4 per cent from year-ago prices. New home sales for all of 2009 had fallen by almost 23 per cent to 374,000, the worst year on record. The National Association of Home Builders is forecasting that sales will rise to more than 500,000 sales this year, an improvement from 2009 but still far below the boom years of 2003 through 2006 when builders clocked more than one million new home sales per year.
The Conference Board reported on Tuesday that its Consumer Confidence Index fell almost 11 points to 46 in February, pushing the index down to its lowest reading since last April. At 46, the index is a long way from the 90 reading that economists generally view as depicting healthy consumer attitudes.
Source: Business Times, 25 Feb 2010