Wednesday, February 24, 2010

New Home Sales Hit Record Low

More bad news for the housing market. New home sales hit a record low in January.

Today, the Commerce Department reported that new home salesdropped 11.2 percent last month, to the lowest level on record going back to the early 1960s.

January's sales slump is part of a much longer trend; new home sales for all of 2009 fell by almost 23 percent, the worst year on record.

Home sales have fallen for three straight months, despite massive government support. Sales will likely fall even further when that support is withdrawn this spring, as scheduled.

The $1.25 trillion Federal Reserve program, which has held down mortgage rates, is set to end March 31 and tax credits to bolster home buying are scheduled to expire at the end of April.

Those supports seem to be the only things holding up the fragile housing market, which is seeing not only slowing sales but also slumping prices.

The drop in home sales pushed the median sales price down to $203.500, pushing the market back to 2003 levels.

With the U-6 unemployment measure remaining at 17%, consumers still aren't spending. In fact, consumer confidence plunged to 46 this month, from 56.5 in January. A reading of 90 indicates a stable economy.

Americans are rightfully scared and they simply aren't spending. Even those who are willing are finding that loans are tough to get right now.

By these measures alone, we are a long way from a housing recovery, or any kind of economic recovery for that matter.

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