New Home Sales Take Unexpected Dip

Washington, DC, Feb. 24, 2010--New home sales fell 11.2% in January to  the lowest rate on record dating back to 1963, the Commerce Department estimated Wednesday.

The third-straight drop in sales to 309,000 on a month-to-month basis was unexpected. Economists forecast sales to rise to a pace of 355,000, with buyers taking advantage of a new federal tax credit.

Data on sales for December were revised higher to a seasonally adjusted annual rate of 348,000, up from 342,000 previously reported.

Sales of new homes are down 6.1% compared with January 2009's 329,000 units, which was the previous record low.

The number of homes for sale rose 0.4% to 234,000 in January. At the January sales pace, it would take 9.1 months to sell that inventory, up from 8.0 months in December and the highest monthly supply since May.

The government has low confidence in the monthly report. It says it can take up to five months to establish a statistically significant trend in sales. Over the past five months, sales have been on a 362,000 seasonally adjusted annual pace, down from 382,000 in the five-month interval through December.