Drop Seen In January New Home Sales

WASHINGTON D.C. - The Commerce Department reported Monday that the number of new single-family homes sold in January fell 9.2 percent.

This news comes on the heels of a National Association of Realtors report last week showing a decrease in the number of existing homes sold in January.

Both sales of new and existing homes set all-time highs in 2004 for the fourth consecutive year. But economists are forecasting a retreat from those highs this year as mortgage rates are expected to start rising.

The National Association of Home Builders believes the lower number of new home sales was due, in part, to bad weather around the country.

?EUR??,,????'??It's important to avoid a knee-jerk reaction to today's report,?EUR??,,????'?? said NAHB President Dave Wilson. ?EUR??,,????'??The fact is that weather was a major factor in the decline, with unusually harsh winter conditions contributing to a 40 percent drop in the Midwest alone. Our latest builder surveys indicate that the fundamentals of the nation's housing market remain very solid.?EUR??,,????'??

January new homes sales were lower in every part of the country except the West, where sales rose by 5.6 percent to an annual rate of 338,000 units.

The biggest decline was a record 40.3 percent plunge in the Midwest where sales dropped to an annual rate of 145,000 units. Sales fell 17.1 percent in the Northeast to an annual rate of 63,000 units and were down 3.3 percent in the South to a rate of 560,000 units.

The drop in new home sales was accompanied by a fall in prices. The median new home price - the point where half the homes sold for more and half for less - was $199,400 in January, down 13.2 percent from a median sales price of $229,700 in December. It was the lowest new home price since a median of $196,000 in December 2003.

New Houses Sold During Period By Construction Stage-Survey:

(Percentages may not add up to 100 due to rounding)