Sales of New Homes Fell in December

Washington, DC, Jan. 27, 2010--New-home sales fell 7.6% to an annual rate of 342,000 in December from 370,000 in November, the Commerce Department estimated Wednesday.

It was the lowest seasonally adjusted sales pace since March.

Sales had risen modestly since earlier in the year, boosted by low mortgage rates and an $8,000 tax credit for first-time buyers. The tax credit was scheduled to end on Nov. 30, a deadline that pulled sales forward. In early November, Congress extended the tax credit until April and expanded it to repeat buyers.

But the change in the law came too late to jump-start December sales.

Realtors say more than 2 million people took advantage of the tax credit, although most of them likely would have purchased a home anyway, analysts say. .

Economists were looking for a small gain in December to about 365,000.

At the December sales pace, it would take 8.1 months to sell the inventory, up from 7.6 months in November.

Builders have cut back on production of new homes, but still face stiff competition from unsold existing-homes as foreclosures continue to mount up.