MarketWatch: New home sales plunge 10.2% to record low

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New home sales plunge 10.2% to record low
Supply of unsold homes rises to record-high 13.3 months

By Rex Nutting, MarketWatch


WASHINGTON (MarketWatch) - Despite a record drop in prices, sales of new homes fell 10.2% in January to a record-low seasonally adjusted annual rate of 309,000, the Commerce Department estimated Thursday.

Sales were down 48.2% compared with a year earlier, the government reported, an indication that the downturn in the housing market was still accelerating as the recession headed into its second year.
Sales were weaker than expected. Economists surveyed by MarketWatch were looking for a sales pace of about 320,000.

Builders cut their median sales prices by a record 9.9% in January compared with December in a bid to move unsold homes. Median sales prices are down 13.5% in the past year, the largest year-over-year decline in 38 years. The average sales price has fallen a record 17.6% in the past year.
Builders are faced with intense competition from foreclosures and distressed sales of older homes. Buyers are faced with declining wealth and an uncertain labor market, offsetting lower mortgage rates that are improving affordability.

Inventories of unsold homes fell by 3.1% to 342,000, the 13th consecutive decline. However, sales are falling even faster. The inventory at the end of January represented a record-high 13.3 month supply at the January sales pace. Nearly half the homes for sale have been completed.

The builders' overstock "will keep prices falling for the rest of this year at least," wrote Ian Shepherdson, chief domestic economist for High Frequency Economics.

On Wednesday, the National Association of Realtors said sales of existing homes fell to a 12-year low in January. .........(more)

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