New-home sales drop 2.2 percent

March 25, 2010 at 12:00a.m.

Associated Press

WASHINGTON

Sales of new homes fell unexpectedly to their lowest point on record in February, in part because stormy winter weather kept buyers away. The results pointed to the housing industry’s struggle to rebound from the worst slump in decades.

Sales fell 2.2 percent last month to a seasonally adjusted annual sales pace of 308,000, the Commerce Department said Wednesday. The news follows a report Tuesday that sales of existing homes fell for a third-straight month in February to the lowest level since July.

The results “provide yet more evidence that the housing market is heading for a double-dip in both activity and prices, if it isn’t there already,” wrote Paul Dales, U.S. economist with Capital Economics.

The drop in new-home sales was the fourth- consecutive monthly decline and the worst showing on records dating to 1963. January’s results, meanwhile, were revised upward slightly to a pace of 315,000.

Economists surveyed by Thomson Reuters had expected new-home sales in February to rise to an annual rate of 320,000.

“While bad weather could well have suppressed the February result, it was dismal no matter how one tries to slice and dice it,” wrote Joshua Shapiro, chief U.S. economist at MFR Inc.

As the housing market sputters, manufacturing remains a source of strength for the economic recovery. Orders for big-ticket manufactured goods rose for a third-straight month in February, bolstered by demand for commercial aircraft and machinery. The Commerce Department said Wednesday that orders for durable goods rose 0.5 percent last month.

The increase was led by another surge in demand for commercial aircraft — an increase of 32.7 percent that followed a 134.9 percent rise in this volatile category in January. Excluding transportation, orders posted a 0.9 percent increase, much better than the 0.6 percent decline in January.

In its report on new homes, the Commerce Department said sales plummeted in parts of the country that were hit by bad weather. In the Northeast, they fell 20 percent from a month earlier. Midwestern sales fell 18 percent. Sales fell nearly 5 percent in the South but rose 21 percent in the West.

The sales report reflects signed contracts to buy homes rather than completed sales. It allows economists to assess how many buyers were out shopping for new homes in a given month.

The number of new homes up for sale in February rose slightly to 236,000. At the current sales pace, it would take more than nine months to exhaust that supply.

There was some positive news for builders: The median sales price climbed on both a monthly and yearly basis. It rose to $220,500, up more than 5 percent from a year earlier and up about 6 percent from January.