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National New Home Sales Down

The Census Bureau says the seasonally adjusted annual rate of new home sales fell 11.2% to 309,000 last month, compared with a revised rate of 348,000 in December.  It was the lowest rate since the government began keeping records in 1963 and comes after declines in November and December.  The drop surprised many industry analysts. A consensus of economists surveyed by Briefing.com had expected January sales to rise to an annual rate of 354,000. “Some people were expecting a surge in demand because of the tax credit,” said Patrick Newport, an economist at IHS Global Insight. “But that surge isn’t materializing.”  New home sales fell in all U.S. regions except the Mid-west, where sales edged up 2.1%. The Northeast was the hardest-hit last month, with sales plunging more than 35%.  “Distressed inventory continues to hit the market at cut-rate prices, drawing potential buyers away from new product,” said Mike Larson, real estate analyst at Weiss Research. “And let’s face it, the

  job market is nothing to write home about, either.”  There were an estimated 234,000 new homes for sale at the end of December, according to the report. At the current sales rate, it would take 9.1 months to sell through that inventory. That’s up from December, when there were 8.1 months of inventory on the market. Prior to December, inventory levels had been steadily declining since May 2009. IHS Global Insight’s Newport said he also expects sales to pop this spring. However, he may reduce his full year forecast for new home sales in light of Wednesday’s report. “Builders are putting up homes,” he said. “But what these numbers are telling us is that those homes aren’t selling.”