New-home sales tumbled to a record-low annual pace in January and there's no relief in sight as mounting damage from the collapsed housing market pushes the country deeper into recession.
The Commerce Department reported Thursday that sales fell 10.2 percent to a seasonally adjusted annual rate of 309,000, the worst showing on records going back to 1963. It was a weaker showing than the pace of 330,000 that economists expected, and shattered the previous all-time monthly low set in September 1981.
Only the Northeast saw sales rise in January from the previous month.
With nationwide sales sagging, an inventory barometer also ballooned to a record high. The government said it would take 13.3 months at the current sales pace to exhaust supply. That puts even more downward pressure on prices.
The median sales price fell to $201,100 in January, a record 9.9 percent drop from the previous month. The median price is the midpoint, where half sell for more and half for less. The average home price also dropped to $234,600 last month, a 9.8 percent decline from December.
Fallout from the housing crisis is one of the biggest problems facing the country. It has figured prominently into the U.S. recession, now in its second year. Foreclosures have spiked, financial companies have racked up multibillion-dollar losses and home builders have been clobbered.
Foreclosures are especially high in California, Florida, Nevada and Arizona — states that had once led the housing boom, which went bust several years ago.
At a hearing Thursday, Senate Democrats praised the Obama administration's plan to spend $75 billion from the $700 billion financial bailout fund to keep up to 4 million U.S. homeowners out of foreclosure.
"The previous administration just covered its ears," while lawmakers rang alarm bells about the escalating crisis as early as two years ago, said Sen. Robert Menendez, D-N.J. "Now we have one that is willing to call in the fire department."
A prominent Republican, Sen. Richard Shelby of Alabama, was skeptical. He countered that subsidies will go to the same major lenders already receiving billions in taxpayer bailout money.
The administration's plans are "a further bailout to the very banks that helped us get into our current situation," Shelby said.
To help lure buyers, President Barack Obama's $787 billion stimulus package includes an $8,000 first-time homebuyer tax credit.
In January, sales fell 5.6 percent in the Midwest. They dropped 6.5 percent in the South and plunged 28 percent in the West. Sales rose 12.5 percent in the Northeast.
Builders are slashing home construction as skyrocketing foreclosures dump more properties on an already glutted market.
In the long run, the reduction in new projects should aid the housing market's recovery as fewer properties for sale help increase competition and stabilize prices. But at the moment, a stable housing market appears months away.
The National Association of Realtors said Wednesday that sales of existing homes fell 5.3 percent to an annual rate of 4.49 million last month, from 4.74 million in December. It was the weakest showing since July 1997.
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