first_imgWASHINGTON – New-home sales fell by the biggest amount in almost nine years in February while home prices declined for a fourth straight month, raising concerns that the high-flying housing market could be in for a rough landing. The Commerce Department reported Friday that sales of new single-family homes dropped by 10.5 percent last month to a seasonally adjusted annual sales pace of 1.08 million homes. It was the second straight monthly decline, following a 5.3 percent fall in January, and marked the biggest one-month drop since April 1997. The slowdown in sales further depressed home prices with the median price for new homes sold in February falling to $230,400, 1.6 percent below the January level. It marked the fourth straight month that the median, or midpoint for home prices, had fallen since hitting an all-time high of $243,900 in October. Analysts, who had been forecasting a more moderate drop of about 2 percent in February sales, said the big decline and downward revisions to sales activity in the previous three months could be signaling that housing will slow more this year than expected. “The new-home market looks like it is starting to stagger,” said Joel Naroff, chief economist at Naroff Economic Advisers, a Pennsylvania forecasting firm. “Bubbles do burst, they really do.” A crash in home prices is seen as one of the biggest threats to economic growth. Some analysts are worried that five straight years of record home sales, fueled by the lowest mortgage rates in a generation, spurred a speculative fever in housing similar to the forces that created a bubble in stock prices in the late 1990s. The bursting of the stock market bubble in 2000 wiped out $7 trillion in paper wealth and pushed the country into a recession in 2001. With mortgage rates higher as the Fed raises rates to fight inflation, the worry is that home sales will see a big drop in January. 160Want local news?Sign up for the Localist and stay informed Something went wrong. Please try again.subscribeCongratulations! You’re all set!last_img

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