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New-Home Sales Hit Record Low in February

WASHINGTON, D.C. – March 23, 2011 – (RealEstateRama) — Sales of newly built, single-family homes declined 16.9 percent in February to a record-low seasonally adjusted annual rate of 250,000 units, according to figures released today by the U.S. Commerce Department.”Today’s report is primarily a reflection of consumer uncertainty regarding the overall economy,” said Bob Nielsen, chairman of the National Association of Home Builders (NAHB) and a home builder from Reno, Nev. “A recent Gallup poll confirmed that the economy is Americans’ top concern right now. At the same time, even qualified buyers who are ready to make a purchase are facing frustrating challenges in terms of tight consumer lending conditions and inappropriately low appraisal values on new construction.”

“February’s sales numbers add to the mounting evidence that the housing recovery is hesitating along with the inconsistent progress of the economic recovery,” acknowledged NAHB Chief Economist David Crowe. “Another problem, however, is consumer perceptions of where home values are headed, particularly when national indexes do not reflect local markets.” Meanwhile, he said, “The continuing fragile state of the housing market should serve as a flag of caution to policymakers who are considering major changes to the nation’s housing finance system and to crucial tax incentives for homeownership such as the mortgage interest deduction.”

New-home sales hit record lows in three out of four regions this February, including the Northeast, where a 57.1 percent decline was recorded, the Midwest, where a 27.5 percent decline was registered, and the South, where a 6.3 percent decline was recorded. The West also posted a 14.7 percent decline.

The inventory of new homes for sale remained unchanged at 186,000 units in February. However, because of the slower sales pace, the months’ supply of homes increased to 8.9 from 7.4 in the previous month.