New-Home Sales Plummet

New-home sales plummeted 16.6% in January as tighter lending standards appear to be taking hold -- making it harder for some homebuyers to qualify for a mortgage.The U.S. Census Bureau reported that new single-family home sales dropped from a seasonally adjusted annual rate of 1.12 million in December to 937,000 in January. This is the biggest monthly drop in 13 years and the lowest level of sales since early 2003. The drop also bumped up inventories of unsold newly constructed homes to a 6.8-month supply. Wachovia Corp. economic analyst Phillip Neuhart noted that winter weather might have deterred some buyers. But the drop is "reflective of a housing market that is still weak" and of tighter underwriting standards on subprime loans, he said. He pointed out that new-home sales in the West dropped by 37.4% in January and by 50.4% year over year. The West had the reputation for the loosest underwriting standards, Mr. Neuhart said. "If you tighten up, the West is going to feel it more than other regions," he said. Meanwhile, Federal Reserve Board Chairman Ben Bernanke told a congressional panel that the turmoil in the subprime sector has not had a significant affect on the housing market so far. The Census Bureau, an agency of the Commerce Department, can be found online at http://www.doc.gov.