New-home sales dropped 10.5% in February to the lowest level in nearly three years, adding further evidence that the housing market is cooling.The U.S. Census Bureau reported new single-family home sales fell from a seasonally adjusted annual rate of 1.21 million in January to a 1.08 million rate in February -- the lowest level since May 2003. National Association of Home Builders economist Michael Carliner said the February data are consistent with reports from homebuilders that sales are softening. He said there might be an uptick in sales in March, but that the "trend is greater weakness." A Mortgage Bankers Association index shows that applications for purchase-mortgage loans declined by 10% in February from the level of the previous month. And such applications are down another 2% in the first three weeks of March.

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