New U.S. single-family home sales unexpectedly fell in February to hit a record low and prices were the lowest since December 2003, showing the housing market slide continues.
The Commerce Department said on Wednesday sales dropped 16.9 percent to a seasonally adjusted 250,000 unit annual rate, the lowest since records began in 1963, after an upwardly revised 301,000-unit pace in January.
Sales plunged to all-time lows in three of the four regions last month. Economists polled by Reuters had forecast new home sales edging up to a 290,000-unit pace last month from a previously reported 284,000 unit rate.
“It’s been a disappointing February for home sales and there are no signs of a turnaround,” said Kurt Karl, chief U.S. economist at Swiss Re in New York.
“We’re going to have a continuing slowdown in the next few months, but people will start to feel better in the second half of the year and construction and sales should do better later this year and into next year.”
U.S. stock indexes fell on the data, while government debt prices rose marginally. The dollar was little changed.
Compared to February last year sales were down 28 percent.
An oversupply of homes exacerbated by an increasing flood of properties falling into foreclosure is frustrating recovery in the housing market. Data on Monday showed a steep drop in sales of previously owned homes in February, with prices tumbling to a near nine-year low.
HOUSE PRICES PLUNGE
The median sales price for a new home plunged 13.9 percent last month to $202,100 (124,277 pounds), the lowest since December 2003. Compared with February last year, the median price fell 8.9 percent. Persistent price declines could dampen hopes of a pick-up in sales during spring.
In the face of stiff competition from foreclosed properties, which typically sell well below market value, builders are holding back on new construction.
At February’s sales pace, the supply of new homes on the market rose to 8.9 months’ worth, the highest since August, from 7.4 months’ worth in January.
There were 186,000 new homes available for sale last month, matching the prior month’s inventory. That was still the smallest supply of home since 1967.
Despite lean inventories, new home sales will likely continue to bounce along the bottom for a while until the glut of previously owned homes is whittled down. New home sales account for less than 10 percent of overall sales.
According to the National Association of Realtors, new home prices have been running 45 percent higher than existing home prices, a premium that is historically about 15 percent, indicating previously owned homes are selling well below the cost of construction.
Separately, the Mortgage Bankers Association said applications for home loans rebounded 2.7 percent last week.
