All Real Estate is Local:

New-home sales in U.S. fall to 13-year low, but in the South Sales Rose 5.7%

This article and others like it reveal that the headlines hide good news for sectors of Real Estate that the general public is not aware of and that awareness of Local Market Activity is very important...

Published: Thursday, March 27,

Nationwide sales of new-construction homes fell in February for the fourth straight month, pushing activity down to a 13-year low as the steep slump in housing continued.

The Commerce Department reported Wednesday that new-home sales in February dropped 1.8 percent from January to a seasonally adjusted annual rate of 590,000 units, the slowest sales pace since February 1995. The decline was slightly worse than expected. Additionally, February's sales were 29.8 percent lower than a year earlier, the report said.

In the South, however, sales rose 5.7 percent from January and 0.7 percent in the West. Sales dropped the most in the Northeast, by 40.6 percent, while they fell 6.4 percent in the Midwest.

The median price of a new-construction home sold last month was $244,100, down 2.7 percent compared with February 2007.

Median means that half of homes sold for more than $244,100 and half for less.

The prolonged slump in housing has dragged down overall economic activity. Many analysts believe the slump could combine with a multitude of other problems - including a severe credit crunch, soaring energy prices and plunging consumer confidence - to push the country into a full-blown recession.

The number of unsold new-construction homes on the market at the end of the month represented a 9.8-month supply at the February sales pace, the same as in January. In other words, it would take 9.8 months to sell all the new homes on the market if they sold at the February pace.

That was the highest inventory level in more than 26 years and reflects the fact that increased numbers of mortgage foreclosures are dumping even more homes on an already glutted market.

In February 2007, the inventory stood at 8.1 months.

Many analysts believe that the slump in housing, which began in 2006, could last into 2009. It was reported on Tuesday that the Standard & Poor's/Case-Shiller index of home prices fell nearly 11 percent in January from a year earlier, the biggest year-over-year decline in the history of the index.

Analysts said that housing is being hurt currently by tighter lending conditions as banks react to soaring mortgage defaults, and by the reluctance of prospective buyers to make a decision, fearing that prices have further to fall.

Wall Street pulled back Wednesday after a drop in February's durable goods orders injected more pessimism about the U.S. economy into the stock market.

The Dow Jones industrial average fell nearly 110 points.

Investors who have been worried about the financial health of U.S. companies and individuals were disappointed to see a 1.7 percent dip in last month's orders of durable goods, or big-ticket items that range from refrigerators to cars to computers.

The Commerce Department's durable goods report is indicative of business spending and consumer demand, so two straight months of declines were worrisome to Wall Street.