New Home Sales Fall to Record Low

A government report released Wednesday showed that the sales of new homes at fell to a record low in February. It is believed to be the outcome from all of the foreclosed homes and a weak economy with high unemployment.

New-home sales fell 2.2% to a seasonally adjusted rate of 308,000 last month, compared to an upwardly revised annual rate of 315,000 in January, the Census Bureau said. What’s crazy is that “this is the lowest rate since the government began keeping records in 1963 and marked the fourth straight month of declines.”

Economists expected February sales to rise to an annual rate of 315,000. New-home sales were down 13% from February 2009. New-home sales fell in every region of the United States, except the West region, which saw a 20.8% jump in new-home sales. The Northeast was hardest hit, with a 20% decline in February. Most likely effected by weather.

A stubborn job market is what is said to of kept pressure on the housing market. The U.S. unemployment rate stood at 9.7% last month, after unexpectedly falling in January, suggesting that the economic recovery could be gaining steam. But, "the economy, while recovering, is still not full speed ahead," said Hoffman.

In regards to new homes, the Census Bureau estimated that 236,000 new homes hit the market in February.

In November, Congress extended and expanded an $8,000 tax credit for first-time home buyers, which also allows some repeat buyers to qualify for a $6,500 credit. Buyers have until April 30 to qualify for the credit.
New-home sales saw a surge of activity when home buyers thought the November tax credit would expire, but retreated after the extension.

Although February's data was "a bit disappointing," Hoffman says the real test will come during peak home buying season in the spring.

"The real story will be if no one knocks at the door for a new-home in an environment of record low mortgage rates, a home buyer's tax credit and a recovering economy," said Hoffman. "If they don't, then it's lights out." Read the full article here: New-home sales fall to record low from CNNMoney.com.