Dismal February intensifies housing slump
Sales of new homes dropped to a record low last month, dimming prospects for a swift recovery for the housing market.
Overall, sales were down 2.2 percent, to a seasonally adjusted annual rate of 308,000, the Commerce Department said Wednesday. Economists had forecast a 1.9 percent rise.
Those numbers followed a similarly bleak report on Tuesday that showed sales of existing homes dropped last month, despite a generous government tax credit meant to lure buyers.
Taken together, the data resurrected concerns that the market could fall into another downturn, with new downward pressure on prices as the supply of houses increases but demand dwindles.
"It was dismal no matter how one tries to slice and dice it," Joshua Shapiro, an economist for MFR Inc cash advance no faxing. wrote.
Sales of new homes have fallen 23 percent since October. Sales rose at a rapid pace last fall as buyers rushed to take advantage of an $8,000 tax credit before its original expiration date. The credit has since been extended to April 30, but there has been no evidence of a buying frenzy.
The drop in February was partly the result of stronger results the previous month: the government said sales reached a rate of 315,000 units in January, better than the 309,000 rate originally forecast. Economists said a series of snowstorms in February may also have contributed to the decline.