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Archive for Tuesday, February 28, 2006

Home sales fall despite warm January

February 28, 2006

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— New data show that slowdown in the nation's long housing boom, which has been anticipated for at least two years, appears to have arrived.

Sales of new homes came in at the slowest pace in a year in January, and the backlog of unsold homes rose to an all-time high, the Commerce Department reported Monday.

Making those developments even more dramatic was the fact that they occurred during an exceptionally mild January - the warmest in more than 100 years.

"The weather in January was as good as it gets, yet demand fell," said Joel Naroff, chief economist at Naroff Economic Advisors. "The decline in new home sales in January makes it clear that there is some real softening in the housing market."

The Commerce Department reported that sales of new single-family homes dropped by 5 percent to a seasonally adjusted annual rate of 1.233 million units last month. That was the slowest pace since January 2005 and left the number of unsold homes at a record high of 528,000.

Earlier this month the Douglas County Appraiser's Office reported that sales of 45 homes closed in Lawrence last month, down 26 percent from the 61 sales recorded during the same month a year earlier.

The 5 percent sales decline nationwide was bigger than expected, dashing hopes that the milder-than-normal January would help to bolster demand. The warm weather had pushed up the level of construction starts last month by 14.5 percent, the fastest rate in three decades.

But the new report showed that with sales lagging, the increase in building activity left a total of 528,000 new homes still for sale at the end of the month, a nine-year high.

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