New-homes sales fell 2.4 percent in February
as the slowing economy depressed activity for a second straight
month, the government said Monday.
The Commerce Department reported that the decline in sales of
new single-family homes last month followed an even bigger 10.8
percent plunge in January, which had been the biggest monthly
setback in seven years.
The back-to-back reductions marked the first consecutive
declines in new-home sales since activity fell for three straight
months from July through September of 1999.
Still, even with the decreases, new homes were sold at a strong
annual rate of 911,000 in February, when adjusted for seasonal
variations, which was above sales total for all of last year of
Meanwhile, a second report showed a slight drop in sales of
existing homes in February. The National Association of Realtors
said sales of previously owned homes edged down 0.4 percent last
month to a seasonally adjusted annual rate of 5.18 million homes.
While the plunging stock market and economic slowdown have
rattled consumer confidence, analysts said home sales activity has
not fallen as much as would be expected, thanks to declining
Last week, the national average for 30-year mortgages dipped to
6.89 percent, far below the peak of 8.64 percent hit last May, when
the Federal Reserve pushed interest rates up for a sixth straight
time in an effort to slow what was then red-hot economic growth
that was raising concerns about inflation.
The Fed switched course at the beginning of this year and
started cutting interest rates, delivering a third half-point
reduction last week, as it attempted to stave off a full-blown
Lower mortgage rates and unemployment levels that are still
close to 30-year lows are helping to keep housing demand at healthy
The 5.4 percent drop in new-home sales in February reflected
weakness in the Midwest and West.
In the Midwest, sales fell 18.9 percent, the biggest decline
since April 2000, to an annual rate of 137,000 units. Sales in the
West were off 1.5 percent to an annual rate of 263,000 annual
Sales in the South, which account for nearly half of total
new-home activity, edged up a slight 0.5 percent last month to an
annual rate of 440,000 homes.
Sales in the Northeast soared by 20.3 percent, the biggest gain
since last October, to a seasonally adjusted annual rate of 71,000
The median price for a new home, the point where half the homes
sold for more and half for less, was $210,900 in February, up 3.2
percent from January's median price of $204,400.
The average price of a new home was up a slight 0.1 percent to
$167,000 in February.