US new home sales in third consecutive monthly fall

The Commerce Department has today revealed a fall in sales of new homes in the US for the month of January – the third consecutive month that sales have fallen.

According to the Commerce Department, new single-family home sales dived by 11.2% to a seasonally adjusted annual rate of 306,000 units – the lowest since records commenced in 1963.

The fall was attributed to a traditionally slow month in sales and the severe wintry weather that gripped much of the US during January.

Celia Chen at Moody’s Economy.com said: “Sales of new homes are starting the year off on surprisingly weak footing.

“The dismal performance of new-home sales indicates that the housing market remains quite fragile, despite efforts to shore up demand. The extension and expansion of the first-time homebuyer tax credit have yet to influence sales of new homes, but the positive impact will become evident in the early spring,” added Chen.

The housing market is crucial to the recovery of the world’s largest economy but house prices in the US continue to fall in the face of consumer worries about the strength of the economic recovery due to high unemployment.

The news comes as chairman of the Federal Reserve Ben Bernanke said US interest rates will need to stay low in order to keep the economic recovery on track.

In a testimony before Congress, Bernanke said there was a “nascent economic recovery” and said long-term recovery will depend on private sector’s demand for goods and services.

Meanwhile, US consumer confidence took a dive in February after the closely-monitored Consumer Confidence Index from the Conference Board fell to a 10-month low of 46, down from a revised 56.5 in January.

The index still remains far away from the 90 points required to show that the world’s largest economy is on solid footing.

Furthermore, the reading is still below the reading of 61.4 recorded in September 2008 – at the height of the global financial crisis. Since the index commenced in 1967, the average reading has been 95.6.

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