New home sales plunge to record low
* New home sales plunged 11.2% in January to a seasonally adjusted annual rate of 309,000 from an upwardly revised 348,000 in December. That was much worse than the 354,000 figure economists were expecting and below the previous record low sales rate of 329,000 a year ago. Data on new homes goes all the way back to 1963.
* The regional breakdown wasn't anything to write home about, either. Sales fell 9.5% in the South, dropped 11.9% in the West, and plunged 35.1% in the Northeast. They inched up 2.1% in the Midwest.
* The supply of new homes for sale increased to 234,000 from 233,000 in December. That's the first time in 32 months that the raw number of homes for sale increased. The sharp decline in sales drove the "months' supply at current sales pace" indicator of inventory to 9.1 from 8. That's the highest reading since last May (9.5).
* The median price of a new home fell 5.6% to $203,500 from $215,600 in December. On a year-over-year basis, prices fell 2.4%. Home prices are now the lowest since December 2003.
So much for the trend of decent housing news! January's new home sales figures were awful across the board. Fewer new homes were sold in this country than at any time since the Kennedy administration. The inventory of homes for sale increased, and the median price of a new home fell to its lowest level in more than six years.
What the heck happened? For one thing, the new home builders are getting their clock cleaned by the existing home market. Distressed inventory continues to hit the market at cut-rate prices, drawing potential buyers away from new product. For another, we're still dealing with a tax credit "hangover" effect. And let's face it, the job market is nothing to write home about, either. I still think we're on the long, slow road to an anemic, lackluster recovery in housing. But numbers like these can sure shake your faith.