Supply of unsold homes rises to record-high 13.3 months
Despite a record drop in prices, sales of new homes fell 10.2% in January to a record-low seasonally adjusted annual rate of 309,000, the Commerce Department estimated Thursday.
Sales were down 48.2% compared with a year earlier, the government reported, an indication that the downturn in the housing market was still accelerating as the recession headed into its second year.
Builders cut their median sales prices by a record 9.9% in January compared with December in a bid to move unsold homes. Median sales prices are down 13.5% in the past year.
Builders are faced with intense competition from foreclosures and distressed sales of older homes. Buyers are faced with declining wealth and an uncertain labor market, offsetting lower mortgage rates that are improving affordability.
Inventories of unsold homes fell by 3.1% to 342,000, the 13th consecutive decline. However, sales are falling even faster. The inventory at the end of January represented a record-high 13.3 month supply at the January sales pace. Nearly half the homes for sale have been completed.
On Wednesday, the National Association of Realtors said sales of existing homes fell to 12-year low in January. See full story.
Government statisticians have low confidence in the monthly report, which is subject to large revisions and large sampling and other statistical errors. In most months, the government isn't sure whether sales rose or fell. The standard error in January, for instance, was plus or minus 15.4%. Read the full government report.
The government says it can take up to five months to establish a new trend in sales. Over the past five months, sales have been on a 374,000 annual pace, 42% slower than a year earlier.
In all of 2008, 483,000 homes were sold down, from 776,000 in 2007 and 1.05 million in 2006.
Details
Sales fell in three of four regions, led by a 28% decline in the West to a record low 59,000. Sales fell 6.5% in the South and fell 5.6% in the Midwest. Sales rose 12.5% in the Northeast, plus or minus 93%.
