U.S. New Home Sales Drop to Record Low as Job Losses, Foreclosures Mount

[Purveyor]

Source: Bloomberg

By Courtney Schlisserman

Feb. 26 (Bloomberg) -- Sales of new homes in the U.S. plunged in January to a record low as soaring unemployment and mounting foreclosures drove buyers away.

Purchases dropped 10 percent to an annual pace of 309,000, the lowest level since data began in 1963, the Commerce Department said today in Washington. The median price decreased 13.5 percent, the most in almost four decades.

Even as they slash prices, builders are likely to keep losing customers as foreclosures drive down the value of existing homes further, making them comparatively more affordable. The Obama administration is making a priority of keeping more Americans in their homes to stem the collapse in property values at the root of the credit crisis.

“There is a risk that you continue to see foreclosures and you continue to have new inventory added to the market that prolongs the adjustment process,” Zach Pandl, an economist at Nomura Securities International Inc. in New York, said before the report.

Housing and Urban Development Secretary Shaun Donovan said today 6 million families in the U.S. may face foreclosure if policy makers don’t act faster to stem the housing decline.

Read more: http://www.bloomberg.com/apps/news?pid=20601087&sid=ank_aa66.Mbg&refer=home