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New Home Sales Drop For Second Month

Sales of new homes fell sharply for a second consecutive month in February, a weaker-than-expected performance that dimmed hopes for a rebound in the troubled housing market.

Recent New Home Sales Reports

Month
Units (annual rate)
% Chg - Period to Period
2006 - Nov 987k + 3.68%
2006 - Dec 1019k + 3.24%
2007 - Jan 890k - 12.66%
2007 - Feb 856k - 3.82%
2007 - Mar 844k - 1.40%
2007 - Apr 981k + 16.23%
source: Haver Analytics

The Commerce Department reported Monday that sales of new single-family homes fell by 3.9% last month to a seasonally adjusted annual rate of 848,000, the slowest sales pace in nearly seven years. All regions of the country except the West experienced weakness last month.

The February decline followed an even larger 15.8% drop in sales in January, which had been the largest one-month plunge in 13 years. The back-to-back declines provided evidence that the housing market is continuing to struggle with lagging demand and a glut of unsold homes.

The weakness in sales pushed the median price of a new home down to $250,000 in February, a drop of 0.3% from a year ago. It marked the second straight month that the median price fell compared with the same period a year ago. The median is the point where half the homes sold for more and half for less.

2007 Feb - New Home Sales by Region

Northeast
Midwest
South
West
41k 124k 450k 233k
- 26.79 % - 20.00% - 7.02% + 24.60%
source: Haver Analytics

By region of the country, sales were up 24.6% in the West, a rebound after a 25.8% plunge in January.

However, every other region showed weakness last month, led by a 26.8% drop in sales in the Northeast and a 20% decline in the Midwest, two areas which experienced a series of winter storm. Sales also fell in the South, dropping by 7%.