New-Home Sales in U.S. Plunge to Record-Low 309,000
By Courtney Schlisserman
Feb. 26 (Bloomberg) -- Sales of new homes in the U.S. plunged in January to a record low as soaring unemployment and mounting foreclosures drove buyers away.
Purchases dropped 10 percent to an annual pace of 309,000, the lowest level since data began in 1963, the Commerce Department said today in Washington. The median price decreased 13.5 percent, the most in almost four decades.
Even as they slash prices, builders are likely to keep losing customers as foreclosures drive down the value of existing homes further, making them comparatively more affordable. The Obama administration is making a priority of keeping more Americans in their homes to stem the collapse in property values at the root of the credit crisis.
“There is a risk that you continue to see foreclosures and you continue to have new inventory added to the market that prolongs the adjustment process,” Zach Pandl, an economist at Nomura Securities International Inc. in New York, said before the report.
Housing and Urban Development Secretary Shaun Donovan said today 6 million families in the U.S. may face foreclosure if policy makers don’t act faster to stem the housing decline.
Stocks rose, recouping yesterday’s losses, after President Barack Obama’s budget proposed as much as $750 billion in new aid for the financial industry. The Standard & Poor’s 500 Index rose 1 percent to 772.32 as of 10:15 a.m. in New York.
Economists had forecast new-home sales would fall to a 324,000 pace last month from a previously reported 331,000, according to the median of 73 projections in a Bloomberg News survey. Estimates ranged from 291,000 to 350,000.
Orders for long-lasting goods fell in January for a record sixth consecutive month, and the number of Americans claiming jobless benefits last week jumped to the highest level since 1982, other reports today showed.
Bookings for durable goods dropped 5.2 percent, more than twice as much as projected, figures from the Commerce Department showed. The number of initial claims for unemployment insurance jumped to 667,000, and a record 5.1 million out-of-work people were receiving benefits, the Labor Department said.
The median price of a new home decreased to $201,100, the lowest level since December 2003. Sales of new homes were down 48 percent from January 2008.
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