New Home Sales Decline in January

Washington, DC, Feb. 26, 2009--Sales of new homes fell 10.2% in January to a record seasonally adjusted annual rate of 309,000, the Commerce Department estimated Thursday.

Sales were down 48.2% compared with a year earlier, the government reported, an indication that the downturn in the housing market was still accelerating as the recession headed into its second year.

Builders cut their median sales prices by a record 9.9% in January compared with December in a bid to move unsold homes. Median sales prices are down 13.5% in the past year.

Builders are faced with intense competition from foreclosures and distressed sales of older homes.

Inventories of unsold homes fell by 3.1% to 342,000, the 13th consecutive decline. However, sales are falling even faster. The inventory at the end of January represented a record-high 13.3 month supply at the January sales pace. Nearly half the homes for sale have been completed.

The government says it can take up to five months to establish a new trend in sales. Over the past five months, sales have been on a 374,000 annual pace, 42% slower than a year earlier.
 
In all of 2008, 483,000 homes were sold, down from 776,000 in 2007 and 1.05 million in 2006.