NEW YORK (Reuters) - New U.S. single-family home sales unexpectedly fell in February to hit a record low and prices were the lowest since December 2003, suggesting the housing market slide was deepening.
KEY POINTS: * New U.S. single-family home sales unexpectedly fell in February to hit a record low and prices were the lowest since December 2003, a government report showed on Wednesday, suggesting the housing market slide was deepening. * The Commerce Department said sales dropped 16.9 percent to a seasonally adjusted 250,000 unit annual rate, the lowest since records began in 1963, after an upwardly revised 301,000-unit pace in January. Sales plunged to all-time lows in three of the four regions last month. * Economists polled by Reuters had forecast new home sales edging up to a 290,000-unit pace last month from a previously reported 284,000 unit rate. Compared to February last year sales were down 28 percent.
COMMENTS:
DOUGLAS BORTHWICK, MANAGING DIRECTOR, FAROS TRADING, LLC,
"We continue to believe that this dip in housing will translate into a double dip on the overall U.S. economy, further rolling forward any stimulus-exit plans set by the Fed, and setting the stage for an announcement of QE3 in July. Jobs and housing remain the focus for the Fed, and both areas continue to face severe difficulties. This continues to be negative for the U.S. dollar, and will see rates in the U.S. staying low for an extended period. With a hawkish ECB, we expect the 2-year Swap differential between the U.S. and Europe will rise to 150 basis points over the next 3 months, and translate into the euro/dollar trading at 1.5000 by that time."
MICHAEL WOOLFOLK, SENIOR CURRENCY STRATEGIST, BNY MELLON, NEW
YORK:
"We saw a 16.9 percent decline month-on-month, and that was much worse than expectations. What makes it still worse is this comes off a steep decline the prior month. And the modest upward adjustment to the prior month means nothing because February was so awful. This is the lowest level for this series since it began. It merely reinforces what we already knew: U.S. housing remains weak and it will take more time for prices to recover. Bernanke is concerned about high unemployment and certainly other factors, including the state of housing."
KURT KARL, CHIEF U.S. ECONOMIST, SWISS RE, NEW YORK:
"New home sales were pretty disappointing. It looks like a record low. It's been a disappointing February for home sales and there are no signs of a turnaround. We're going to have a continuing slowdown in the next few months, but people will start to feel better in the second half of the year and construction and sales should do better later this year and into next year. There's some pent-up demand from household formations. It could be single- or multi-family."
DAVID SLOAN, ECONOMIST, IFR ECONOMICS, A UNIT OF THOMSON
REUTERS:
"With price data also falling sharply the data confirm the housing market remains extremely weak even if February's regional breakdown hints weather played a part, and signals for March are marginally improved. Not only was the monthly total a record low, all 4 regions saw record lows, confirming that the market is weak nationwide.
"The data on both sales and prices is even weaker than delivered by the unexpectedly weak February existing home sales report. Looking forward to March it can be said that the National Association of Homebuilders survey moved up a touch, as have weekly data from MBA house purchase index. However only a marginal improvement from February's record low is implied. Housing remains absent as a source of momentum in the economic recovery. Indeed, the latest data shows the sector, far from recovering, hitting new record lows."
MARKET REACTION: STOCKS: U.S. stock indexes declined BONDS: U.S. bond prices added modestly to gains. FOREX: The dollar was little changed.
