Sunday, March 27, 2011

US home sales slump to lowest level since 1960's

US home sales slump to lowest level since 1960's

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WASHINGTON: Sales of new homes in the United States have slumped to the lowest level since the 1960's, official data showed Wednesday, offering more evidence of an lingering real estate crisis.

Sales tumbled nearly 17 percent in February, the Commerce Department said, to a seasonally adjusted total of 250,000 sales during the month.

That marked the lowest number of units sold since 1963, when records began.

At the current rate it would take almost nine months for the all the new homes on the US market to be sold -- if no more homes are built.

The biggest slowdown in turnover was seen in the country's populous northeast, with sales down 57 percent from January.

"Nothing good can be said about the February report," said Steven Ricchiuto, an economist with Mizuho describing it as "several times worse that the markets expected."

The figures compounded a week of bad news for homeowners and the massive US real estate industry.

The National Association of Realtors on Tuesday said sales of already-owned homes fell 9.6 percent in February.

Despite low home prices and ultra-low interest rates the market has faltered as banks have tightened up loan requirements, ending years of profligate consumer borrowing.

"(Today's) report and the existing home sales data released yesterday confirm that the housing market is still in free fall," said Ricchiuto.

But Wednesday's Commerce Department's report contained the prospect of a slight -- and perhaps only statistical -- reprieve for struggling homeowners.

John Ryding and Conrad DeQuadros of RDQ Economics explained the low-level of real sales meant vast swings were possible.

According to non-seasonally adjusted figures only 19,000 new homes were sold in February, or 380 homes on average in each US state, the RDQ economists said.

"The actual level of new home sales is so small that modest variations in the level of sales have a huge impact on percentage changes," they warned clients.

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