New-home sales at 161/2-year low

WASHINGTON - Sales of new homes plunged last month to the lowest in 161/2 years, as housing slumped further at the start of the spring sales season, a government report yesterday showed.

Also, the median price of a new home fell compared with March 2007 by the largest amount in nearly four decades.

The Commerce Department said sales of new homes dropped 8.5 percent last month compared with March 2007 to a seasonally adjusted annual rate of 526,000 units, the slowest sales pace since October 1991.

The median price of a home sold in March dropped by 13.3 percent compared with March 2007, the biggest year-over-year price decline since a 14.6 percent plunge in July 1970.

The dismal news on new-home sales followed earlier reports showing sales of existing homes fell by 2 percent in March.

New-home sales last month were down in all regions of the country, dropping the most in the Northeast, a decline of 19.4 percent. Sales fell by 12.9 percent in the West, 12.5 percent in the Midwest, and 4.6 percent in the South.

In other economic news, orders to factories for big-ticket manufactured goods fell in March for a third straight month, the longest string of declines since the 2001 recession.

The Commerce Department said demand for durable goods dropped by 0.3 percent last month, a worse-than-expected performance that underscored the problems manufacturers are facing from a severe economic slowdown. The last time orders fell for three consecutive months was from February to April of 2001, when the country was sliding into the last recession.

The weakness in manufacturing orders was led by a 4.6 percent drop in orders for autos, a sector hard-hit by soaring gasoline prices and the weakening economy, which have cut sharply into car sales.

Orders in the category that includes home appliances fell by 6.6 percent. This industry has been hurt by the two-year slump in home sales.

President Bush said Tuesday that the economy was not in a recession but a period of slower growth. However, economists who believe the country has fallen into a recession pointed to the string of declines in manufacturing orders to support their view.

"The broad swath of data in the March (orders) report is indicative of a mixed set of conditions in a factory sector that is, overall, in a mild recession," said Cliff Waldman, economist for the Manufacturers Alliance/MAPI.