New Home Sales Fall in January

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Worse Than Economists Had Anticipated

 

By Robert Schroeder, MarketWatch

Last update: 10:52 a.m. EST Feb. 27, 2008

WASHINGTON (MarketWatch) -- Sales of new homes nationwide fell by 2.8% in January, led by a drop of more than 10% in the Northeast, the Commerce Department reported Wednesday.

Sales of new homes slipped to a seasonally adjusted annual rate of 588,000 last month, just shy of the 590,000 that economists surveyed by MarketWatch had expected.

The decline marked a 13-year low and constituted the latest sign of prolonged weakness in the U.S. housing market. January's sales pace was down 33.9% compared with January 2007.

Meanwhile, the government revised December's sales pace for new homes to 605,000 units, up slightly from the 604,000 reported earlier. In recent months, large downward revisions to the data have become common.

Sales fell in three of four regions in January. The Northeast took the biggest hit, showing a loss of 10.3%, while sales dropped by 7.6% in the Midwest and by 2.4% in the South.

Bucking the trend, sales of new homes in the West increased 2.2% last month.

The median sales price fell to $216,000, down 4.3% compared to December 2007.

The average sales price posted a small gain of 0.7%. It rose to $276,600 compared with the final month of 2007.

Government statisticians have low confidence in the monthly report, which is subject to sizable revisions as well as large sampling and other statistical errors. Indeed, the government says it can take up to five months to establish a new trend in sales.

In a separate report issued Wednesday, the Commerce Department said that demand for durable goods fell back in January after a burst of orders in December, further underscoring how the U.S. economy's slowing. See full story.