New Home Sales Plunge 10.2%

Sales of new homes plunged 10.2 percent in January to their weakest levels in five years, the Commerce Department said moments ago.

The median price of a new home dropped 12 percent to $201,100.

New home sales dropped to a record-low annual pace of 309,900.

Today's news comes on the heels of poor existing-home sales news released yesterday.

There's some more bad news: Inventories of new homes actually rose from a 12.4-month supply to a 13.3-month supply. That means there's way too many new homes for potential buyers.

A bottom to the housing bust will only occur when inventories fall more in line with demand and the supply starts shrinking, not increasing, as it did in January.

-- Frank Ahrens
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