U.S. January New-Home Sales Drop Despite Credit Extension

The Commerce Department said on Wednesday sales dropped 11.2 percent to a 309,000 unit annual rate, the lowest level since records started in 1963, from 348,000 units in December. December’s original estimated rate was 342,000, a drop of 7.6% from November. December’s rate was later revised to 348,000. January’s rate was 6.1% below the  January 2009 estimate of 329,000.

Details of the sales numbers are as follows:

• Sales took the biggest dive in the Northeast, where 24,000 homes were sold in January, compared to 37,000 in December, a decline of 35.1%.
• In the West, sales declined 11.9% to 74,000 from 84,000.
• In the South, sales declined 9.5% to 162,000 from 179,000.
• The Midwest was the only region to see a month-over-month increase, up 2.1% to 49,000 from 48,000. 

The Census and HUD said the median sales price for new homes sold in January 2010 was $203,500, while the average was $254,500. The December median was $221,300 and the average was $290,600. The median sales price for a new home fell 5.6 percent last month from December to $203,500, the lowest since December 2003.

Sales of newly built U.S. single-family homes unexpectedly fell to a record low in January, while mortgage demand for purchases hit a 13-year low last week, fanning fears of renewed housing market weakness. It was the third straight monthly drop in new home sales and the largest percentage decline in a year. Analysts, who had expected a 360,000 unit pace, said bad weather was partly to blame and warned of more of the same for February.

Compared to January last year, new home sales fell 6.1 percent. Last month's drop came despite the extension of a popular tax credit for first-time buyers, which was also expanded to include repeat buyers. Sales are expected to rebound in the spring as buyers try to close purchase contracts before the credit expires in June.