New Home Sales Plunge to Lowest Level in 16 1/2 Years (Martin Crutsinger)

WASHINGTON (AP) — Sales of new homes plunged in March to the slowest pace in 16 1/2 years as a two-year housing downturn extended into the start of another spring sales season. The median price of a new home in March compared to a year ago fell at the fastest clip in 38 years.

Sales of new homes dropped by 8.5 percent last month to a seasonally adjusted annual rate of 526,000 units, the slowest sales pace since October 1991, the Commerce Department reported Thursday.

{xtypo_quote_left} Housing, which boomed for five years, has been in a prolonged slump for the past two years with sales and home prices falling at especially sharp rates in formerly hot sales areas. {/xtypo_quote_left} 

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.

Housing, which boomed for five years, has been in a prolonged slump for the past two years with sales and home prices falling at especially sharp rates in formerly hot sales areas.

Some analysts said they believe the slide in sales may be close to ending although they said any rebound is likely to be slow and anemic with prices continuing to fall, possibly until this time next year.

Earlier this week, the National Association of Realtors reported that sales of existing homes also fell in March, dropping by 2 percent, with prices declining on a year-over-year basis by 7.7 percent.

"The start of the spring home buying season is turning out to be a bust," said Stuart Hoffman, chief economist at PNC Bank Corp. in Pittsburgh. "It is much better to be a buyer than a seller right now."

Hoffman said he thought sales would stabilize by this fall but that prices could keep falling until the start of the 2009 spring sales season. Prices are being depressed by the continued huge inventory of unsold homes, a backlog that reflects rising numbers of mortgage defaults which are dumping more homes on an already glutted market.

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