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US home sales hit 5-month low

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US home sales hit 5-month low

The sale of new US homes declined in February, a sign the cold weather may have limited buying after an unexpected surge at the start of the year.

New US home sales declined 3.3 percent in February to a seasonally adjusted annual rate of 440,000, the lowest level in five months, the Commerce Department reported today in Washington. This follows a revised gain of 455,000 in January that was the strongest in a year. The monthly rate was below estimates calling for 445,000.

New home sales are used to gauge the underlying performance of the US economy. Because home buyers spend money on furnishings and financing, higher home sales are typically associated with higher demand for goods and services.

Compared to year-ago levels, new home sales were 1.1 percent lower. The median sales price of new homes sold in January was $261,800. There were 189,000 new homes for sale at the end of February, the highest number since December 2010. At the current sales rate, this represents a supply of 5.2 months, official data showed.

Severe weather this winter has weighed on an already struggling housing sector. Cold weather led to a sharp decline in home sales in December, fueling concern the housing recovery may take longer to materialize. Higher mortgage rates have weighed on the housing recovery since last summer. Prospective buyers have seen mortgage rates rise considerably over the previous year. According to Freddie Mac, mortgage rates are unlikely to return to the historic lows experienced in 2012.

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