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Friday 29th of January 2010
January 27, 2010    

US new home sales in steep fall

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by Kay Murchie
US new home sales in steep fall

The Commerce Department has today revealed a fall in sales of new homes in the US for the month of December - the second consecutive month that sales have fallen.

According to the Commerce Department, new single-family home sales dived by 7.6% to a seasonally adjusted annual rate of 342,000 units, down from a revised 370,000 in the previous month.

Meanwhile, a total of 374,000 new homes were sold during the 2009 year - a fall of 23% compared with 2008 and the lowest number sold in a year on record.

The news came as a disappointment to analysts who had expected an increase in December.

However, December’s steep fall was attributed to the end of a rush to beat the original expiration of the $8,000 tax credit for first-time buyers. The tax credit had been due to expire on November 30, 2009 but has now been extended to April 30, 2010.

Commenting on the figures from the Commerce Department, John Canally at LPL Financial, said: “This [fall] was again related to the potential ending of the home-buyer tax credit. If you don’t start seeing a rebound by February in these home sales then I would start to get concerned.”

The figures will no doubt cause concern in the US since the housing market is one area that is crucial to the recovery of the world’s largest economy.

Recent figures have raised concerns that the housing market recovery might be faltering.

Earlier this week, the National Association of Realtors revealed a sharp fall in sales of previously owned homes in the US for the month of December.

The industry body said sales fell 16.7% to an annual rate of 5.45 million units in December, down from 6.54 million the previous month. Analysts had expected a rate of 5.90 million units.

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