New Home Sales Plummet in January

February 25, 2011 (Chris Moore)
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In the latest new home sales report released by the Commerce Department, new single-family homes plummeted 12.6 percent in the month of January to a seasonally adjusted rate of 284,000, a dismal showing following one of the sector’s worst years in half a century.

Overall, new-home sales were down 18.6 percent compared to January 2010. The median sales price for a new home dropped 1.9 percent from December to $230,600. Compared to last January, the median price still was up 5.7 percent.

Two out the four regions, the Northeast and the Midwest, experienced sales increases compared to December 2010, however, sales plummeted in the West by 36.5 percent, while the South saw sales dip 12.8 percent. All regions showed declines from year-over-year sales.

At January’s sales pace, the supply of new homes on the market rose to 7.9 months worth from 7.0 months worth in December. There were 188,000 new homes available for sale last month.

Buyers purchased 322,000 new homes last year, the fewest annual total on record going back 47 years. It was a drop of 14.1 percent from the 375,000 new homes sold in 2009. A glut of foreclosed houses on the market is putting pressure on new home sales, forcing builders to drastically scale back on construction projects.

New-home sales remain at about half the 600,000 a year pace that economists view as healthy.

Tags: Commerce Department, new home sales, single family homes, median sales price, average sales price, construction projects