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New Home Sales Dive to Record Low New Home Sales Dive to Record Low

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HOUSING

New Home Sales Dive to Record Low

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Sales of new homes plummeted in February to the lowest level since the government began tracking them in the 1960s.(Scott Olson/Getty Images)

Correction: The original version of this report misstated the time period for the indicator of new homes sold. It is a seasonally adjusted annual rate.

The pace of new home sales plummeted to a record low last month, the Commerce Department reported Wednesday in a further sign that the battered housing market is only slumping further.

 

(RELATED: Why Many Americans Still Want to Buy)

Sales fell 16.9 percent from January, delivering a shock to analysts who had expected a gain for last month. The seasonally adjusted annual rate of 250,000 homes sold marks the slowest pace recorded since the data series began in the 1960s.

Median sale prices fell 13.9 percent, which represents the sharpest one-month drop on record.

 

Wednesday's numbers for February were coupled with an upward revision in January's pace from 284,000 to 301,000 homes sold.

(VIDEO: Be Afraid: U.S. Economy Is at Risk)

Overall, though, the bitter news seemed to cement a darkening picture of the housing market, and it follows closely on the heels of a disappointing 9.6 percent drop in existing home sales reported earlier this week.

 

Some analysts said the severity of the drop overstated the dire state of housing. Research firm Ticonderoga Securities said much of the decline was tied to bad weather in February and said it was "not overly concerned about today's metric."

"We note that Not Seasonally Adjusted (NSA) sales were flat sequentially in the West and South, which given the weather should be considered a minor victory," the firm wrote in an analysis reposted by Business Insider. "We believe the 57% decline in the Northeast and 27% drop in the Midwest illustrates the weather’s negative impact. Sales in the important South declined 6.3%, while the West dropped 14.7%."

In an analysis sent shortly before Wednesday's housing numbers were released, Goldman Sachs pointed to changes in building codes, among other factors, as less ominous explanations for the recent burst of bad data in recent days.

"[We're] not too worried," two Goldman economists wrote. "We do not see the recent data as a sign that housing activity has gotten materially worse."

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