New Home Sales Plunge In January To One Of The Worst Months On Record

02-24-2011 • CNBC.com & BusinessInsider.com

Compared to January last year sales were down 18.6 percent. Sales surged in December as buyers in California rushed to take advantage of the tax credit for new homes. Sales in the West plunged 36.5 percent after spiking 62.5 percent the prior month. A glut of foreclosed houses on the market is putting pressure on new home sales, forcing builders to drastically scale back on construction projects. Analysts expect new home sales to remain depressed. Data on Wednesday showed sales of previously owned homes were the highest in eight months in January, but were driven by a surge in purchases of distressed properties. At Januarys sales pace, the supply of new homes on the market rose to 7.9 months worth from 7.0 months worth in December. There were 188,000 new homes available for sale last month, the lowest since December 1967.