A new government report has revealed that new homes sales reached the lowest level on record in February. Dropping 16.9 percent from January, sales fell to an annual rate of 250,000, which is the lowest number seen since record keeping began in 1963.
Sales Dropped 28 Percent from 2010
The report, released on Wednesday by the Census Bureau, revealed that sales dropped from the 301,000 homes sold in January. Even worse, the number of sold new homes decreased 28 percent from the 347,000 homes sold in February of last year.
This release followed Monday’s grim report that existing home sales had dropped 9.6 percent, month-over-month and 2.8 percent lower than Feb. 2010 sales.
Bad Weather Adds to Low Sales
Some speculate that bad weather may have played a role in the low sales during the month of February. The lowest new home sales in the report were found in the Northeast and Midwest, two areas that were hit with massive snow and ice storms during the month.
However, the report found sales were low in all four regions of the U.S., meaning while weather probably played a role in the lack of sales, it wasn’t a significant contributor.
New Home Sales More Important Than Existing Sales
Because the report shows that new home sales have dropped significantly lower than existing home sales, some believe the housing market is in more trouble than it was on Monday. This is because new home sales are actually more crucial to the nation’s economy.
Existing home sales circulate money that has already been placed in a lender’s hands–similar to exchanging dollars that have already been produced. However, new home sales actually add to the gross domestic product and drive economic activity.
With sales so low, it’s no wonder home construction hit a 27-year low in February. Homeowners, still concerned with the struggling economy, are just not ready to take on the huge responsibility of a home loan.
