In more bad news for the beleaguered housing industry, sales of new homes fell in January for a third straight month, pushing activity down to the slowest pace in nearly 13 years.
The median price of a new home dropped to the lowest level in more than three years.
The Commerce Department reported Wednesday that new home sales fell by 2.8 per ent last month to a seasonally adjusted annual rate of 588,000 units, the slowest pace since February 1995.
The median price of a new home dropped to $216,000 in January, down 4.3 per cent from the December median sales price, the point where half the homes sold for more and half for less. That was the lowest median price since September 2004 and underscored that the steep slide in housing is still under way.
Analysts believe that housing activity has further to fall as a tidal wave of mortgage foreclosures is dumping more unsold homes on an already glutted market.
For January, the inventory of unsold homes dropped but since the pace of sales activity slowed as well, the number of months it would take to exhaust the current inventory rose to 9.9 months, the longest period in more than 26 years.
Until this inventory backlog is worked down further, economists are predicting more declines in prices in the months ahead.
The 2.8 per cent drop in new home sales in January followed even bigger declines of 4 per cent in December and 13.1 in November and represented weakness in every part of the country except the West, which saw sales increase by 2.2 per cent.
Sales fell by 10.3 per cent in the Northeast and dropped by 7.6 per cent in the Midwest and 2.4 per cent in the South.
Agencies