New home sales plumb record lows, prices drop
Sales of new homes sank to a record low in February, and prices were the weakest in just over seven years — underscoring the housing market’s lingering malaise, which could slow the economic recovery.
The Commerce Department said yesterday sales of new single-family homes dropped 16.9 percent to a seasonally adjusted 250,000-unit annual rate, the lowest since records began in 1963, after a 301,000-unit pace in January.
Despite the surprise plunge in sales, economists did not believe a new downturn in the housing market was underway, with some suggesting bad weather might have been a factor.
“We do not believe the housing sector is on the verge of renewed contraction. Rather, we continue to expect the recovery in housing to be disappointingly and frustratingly slow,” said Michelle Girard, an economist at RBS in Stamford, Connecticut.
Analysts do not see the housing weakness derailing the economic recovery. However, it could be slowing growth as plummeting home values erode consumer confidence and hurt spending at a time when there are signs the economy is picking up.