New home sales plunge to record low in February - Yahoo! News

WASHINGTON (Reuters) – New single-family home sales unexpectedly fell in February to hit a record low and prices were the lowest since December 2003, showing the housing market slide was deepening.

The Commerce Department said on Wednesday sales dropped 16.9 percent to a seasonally adjusted 250,000 unit annual rate, the lowest since records began in 1963, after an upwardly revised 301,000-unit pace in January.

Sales plunged to all-time lows in three of the four regions last month. Economists polled by Reuters had forecast new home sales edging up to a 290,000-unit pace last month from a previously reported 284,000 unit rate.

"It's been a disappointing February for home sales and there are no signs of a turnaround," said Kurt Karl, chief U.S. economist at Swiss Re in New York.

"We're going to have a continuing slowdown in the next few months, but people will start to feel better in the second half of the year and construction and sales should do better later this year and into next year."

U.S. stock indexes fell on the data, while government debt prices rose marginally. The dollar was little changed.

Compared to February last year sales were down 28 percent.

An oversupply of homes exacerbated by an increasing flood of properties falling into foreclosure is frustrating recovery in the housing market. Data on Monday showed a steep drop in sales of previously owned homes in February, with prices tumbling to a near nine-year low.

HOUSE PRICES PLUNGE

The median sales price for a new home plunged 13.9 percent last month to $202,100, the lowest since December 2003. Compared with February last year, the median price fell 8.9 percent. Persistent price declines could dampen hopes of a pick-up in sales during spring.

In the face of stiff competition from foreclosed properties, which typically sell well below market value, builders are holding back on new construction.

At February's sales pace, the supply of new homes on the market rose to 8.9 months' worth, the highest since August, from 7.4 months' worth in January.

There were 186,000 new homes available for sale last month, matching the prior month's inventory. That was still the smallest supply of home since 1967.

Despite lean inventories, new home sales will likely continue to bounce along the bottom for a while until the glut of previously owned homes is whittled down. New home sales account for less than 10 percent of overall sales.

According to the National Association of Realtors, new home prices have been running 45 percent higher than existing home prices, a premium that is historically about 15 percent, indicating previously owned homes are selling well below the cost of construction.

Separately, the Mortgage Bankers Association said applications for home loans rebounded 2.7 percent last week.

(Reporting by Lucia Mutikani; Additional reporting by Ellen Freilich in New York; Editing by Andrea Ricci)

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The housing market continues to be a drag on the recovery.

Home sales dive, prices near 9-year low - Yahoo! News

WASHINGTON (Reuters) – Sales of previously owned U.S. homes plunged in February and prices hit their lowest level in nearly nine years, implying a housing market recovery was still a long way off.

The National Association of Realtors said on Monday sales fell 9.6 percent month over month to an annual rate of 4.88 million units, snapping three straight months of gains. The percentage decline was the largest since July.

Economists polled by Reuters had expected February sales to fall 4.0 percent to a 5.15 million-unit pace from the previously reported 5.36 million unit rate in January. January's pace was revised up slightly to 5.40 million.

"This is a frustrating number. The U.S. residential real estate market doesn't seem to want to turn around despite better affordability," said David Carter, chief investment officer at Lenox Advisors in New York.

Financial markets largely ignored the data. U.S. stocks were up sharply in early trade, partly on news of a bid by AT&T for Deutsche Telekom AG's T-Mobile USA and growing hopes Japan would get its nuclear crisis under control.

U.S. debt prices extended losses as the U.S. Treasury said it would begin selling off $142 billion in mortgage-backed securities it had acquired to help tame the financial crisis, while the dollar rose against the yen on intervention worries.

The Realtors' group said the median home price dropped 5.2 percent in February from a year earlier to $156,100, the lowest since April 2002, a sign of the relentless downward pressure on prices from a market flooded with foreclosure sales.

"If the price declines persist, even with the job market recovery, that could hamper recovery in the housing market," said NAR chief economist Lawrence Yun.

A glut of homes on the market and the flood of foreclosure properties are holding back a recovery in the housing sector, whose collapse helped to tip the U.S. economy into its worst recession since the 1930s.

Foreclosures and short sales, which typically occur below market value, accounted for 39 percent of transactions in February, up from 37 percent the prior month, the trade group said. All-cash purchases made up a record 33 percent of transactions in February.

Sales fell across the board, with multifamily dwellings declining 10 percent and single-family home units dropping 9.6 percent. Compared with February last year, overall sales were down 2.8 percent.

At February's sales pace, the supply of existing homes on the market rose to 8.6 months' worth from 7.5 in January. A supply of between six and seven months is generally considered ideal, with higher readings pointing to lower house prices.

(Additional reporting by Ryan Vlastelica in New York; Editing by Andrea Ricci)

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Housing starts see biggest drop since 1984 - Yahoo! Finance

Housing starts see biggest drop since 1984

WASHINGTON (Reuters) - Housing starts posted their biggest decline in 27 years in February while building permits dropped to their lowest level on record, suggesting the beleaguered real estate sector has yet to rebound from its deepest slump in modern history.

Groundbreaking on new construction dropped 22.5 percent last month to an annual rate of 479,000 units, according to Commerce Department data released on Wednesday. This was just above a record low set in April 2009 and way below the estimates of economists, who had been looking for a smaller drop to 570,000.

January's figure was revised up to 618,000 units from 596,000. But that did not change the tenor of the report, which confirmed that the sector is failing to recover despite interest rates near record lows.

Building permits, a hint of future construction demand, fell to a record low of 517,000 units from a revised 563,000, and were down by about 20 percent from levels seen in February 2010.

Housing was at the epicenter of the financial crisis of 2007-2009.

One key impediment to the sector's recovery is a vast backlog of unsold inventory, while a shaky job market has also made consumers reluctant to embark on any major new financial commitments. Making matters worse, a glut of foreclosures, stalled in recent months by revelations of improper loan documentation, is depressing the market.

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Underwater mortgages rise as home prices fall - Yahoo! News

WASHINGTON – The number of Americans who owe more on their mortgages than their homes are worth rose at the end of last year, preventing many people from selling their homes in an already weak housing market.

CoreLogic says about 11.1 million households, or 23.1 percent of all mortgaged homes, were underwater in the October-December quarter. That's up from 22.5 percent, or 10.8 million households, in the July-September quarter.

The number of underwater mortgages had fallen in the previous three quarters, but that was mostly because more homes had fallen into foreclosure.

Underwater mortgages typically rise when home prices fall. Home prices in December hit their lowest point since the housing bust in 11 of 20 major U.S. metro areas. In a healthy housing market, about 5 percent of homeowners are underwater.

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