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New-Home Sales Dip for Second Straight Month
By Martin Crutsinger   Associated Press
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WASHINGTON — 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 903,000.

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 mortgage rates.

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 recession.

Lower mortgage rates and unemployment levels that are still close to 30-year lows are helping to keep housing demand at healthy levels.

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 units.

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 homes.

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.

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