BODY:
New home sales continued their precipitous slide in February, hitting a 13-year low as unsold homes languished on the market because of a scarcity of buyers.
Sales of new homes fell 1.8% in February, according to a report Wednesday by the Commerce Department. The median price of new homes in February -- half sold for more, half for less -- dropped to $244,100, down 2.7% from a year ago.
The news follows two other reports this week that showed a deepening of the housing crisis that is hobbling the national economy, as well as a potentially grim outlook for the spring housing market.
"New home sales are dripping down nationally and across all regions," says Patrick Newport, an economist at Global Insight.
"It's still hard to get credit," Newport adds. "Banks are being careful and requiring bigger down payments. Because of that, we don't think the market has picked up and won't until the second half of this year."
Home prices in major metropolitan areas plunged 11.4% in January from a year earlier, the steepest decline since such data was first collected in 1987, according to the S&P/Case-Shiller composite index.
And home prices fell 3% in January from December, based on a survey from the Office of Federal Housing Enterprise Oversight.
The Northeast saw the biggest decline in new home sales in February from January, a 40% drop, the Commerce Department said. A gain of 5.7% was reported in the South and 0.7% in the West. In the Midwest, new home sales slid 6.4%.
"Today's new home sales declined in part because builders have cut back so sharply, so there are fewer new homes coming on the market," says Lawrence Yun, chief economist for the National Association of Realtors.
The continued decline in prices, however, could tempt buyers and help shore up the market, says Pat Lashinsky, chief executive of ZipRealty. That, coupled with federal initiatives to ease the housing crisis, may bring some relief.
"With stimulus (efforts) and tax returns, people on the sidelines will move in," Lashinsky says. "It's not going to be back to the go-go days, but consumers are interested and they think the market is stabilizing."
Mortgage applications jumped nearly 50% last week as mortgage rates fell after the Federal Reserve cut interest rates and took steps to restore bond market confidence, the Mortgage Bankers Association said.
But some say the turnaround has yet to arrive. Home prices have fallen for months straight, Newport says, but many would-be buyers continue to watch from the sidelines. "They're waiting to see how far prices will drop," Newport says.
