WASHINGTON — Sales of new homes plummeted 7.1% in January to the lowest level in nearly a year, as both mortgage rates and prices continued to climb, the government said today.
The Commerce Department said new single-family homes were sold at a seasonally adjusted annual rate of 589,000 units in January after falling 8.4% in December. December sales originally were reported to have dropped 9.6%. It was the worst performance since sales fell to 556,000 homes on an annual basis last March.
It marked an ominous start for the new year after new-home sales slowed to 650,000 units in 1989, down 3.8% from 1988 and the lowest level since 639,000 homes were purchased in 1984.
The National Assn. of Realtors reported Wednesday that sales of existing homes, which represent about 80% of the housing market, dropped 2.2% in January. The real estate group blamed higher mortgage rates and the usual January buying lull for the drop.
Interest rates rose from 9.83% to 10.05% in January. Rates continued to rise in February, reaching 10.31% by last Friday.