New US Home Sales Drop By Record 26%

Source : The Straits Times, Jan 29, 2008

WASHINGTON - SALES of new homes in the United States plunged by a record amount last year, while prices posted their weakest showing in 16 years, demonstrating the troubles builders were facing with a huge backlog of unsold homes.

The Commerce Department reported yesterday that sales of new homes dropped 26.4 per cent last year to 774,000. That marked the worst year on record, surpassing the old mark of 23.1 per cent in 1980.

The US government reported that the median price of a new home barely budged last year, edging up a slight 0.2 per cent to $246,900, the poorest showing since prices fell 2.4 per cent during the 1991 housing downturn. The new report reinforced the view that housing was currently undergoing its worst downturn in more than two decades, with the slump threatening to surpass in some ways the severe housing recession of the early 1980s.

The housing weakness has dragged down overall growth and sent shockwaves through the rest of the US economy including the financial sector, which is dealing with billions of dollars in losses in subprime mortgages.- ASSOCIATED PRESS