New-home sales plunged in February to record low

WASHINGTON (AP) -- Sales of new homes plunged in February to the slowest pace on records dating back nearly half a century, a dismal sign for an already-weak housing market.

New-home sales fell 16.9 percent last month to a seasonally adjusted annual rate of 250,000 homes, the Commerce Department said Wednesday. It's the third straight monthly decline and far below the 700,000-a-year pace that economists view as healthy.

New-home sales now account for just 5 percent of total home sales so far this year. They typically represent closer to 15 percent in healthier housing markets. There were just 186,000 new homes available for sale in February, the lowest inventory in more than four decades.

The median price of a new home dropped nearly 14 percent to $202,100, the lowest since December 2003. The median is now 30 percent higher than the median price of resold homes -- twice the typical markup.

In response, homebuilders are cutting their selling prices and building more inexpensive homes, pushing down sales prices. They are struggling to compete with a wave of foreclosures, which has lowered the price of previously occupied homes. High unemployment, tight credit and uncertainty over prices have also kept many potential buyers from making purchases.

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