NEW YORK (CNN/Money) -
The pace of new home sales in the United States plunged in February for the second month in a row, the government said Wednesday, as the housing market, one of the few bright spots in an otherwise murky economy, showed the effects of harsh winter weather.
The Commerce Department said the pace of new home sales fell 8.1 percent to a seasonally adjusted annual rate of 854,000 units from a revised rate of 929,000 units in January. Economists, on average, expected a pace of 935,000 units, according to a Reuters poll.
Though February's rate was surprisingly weak, it could simply mean the brutal snowstorm that swept across the eastern half of the United States slowed real estate activity more than expected.
"It is tempting to argue that two straight months of sales nearer to the 900,000 level than one million...is evidence of a real slowing in housing. But it probably tells us more about the awful weather across much of the country," said Ian Shepherdson, chief U.S. economist at High Frequency Economics Ltd.
Shepherdson pointed out that sales fell 37 percent in the Northeast, while sales in the South fell only 9 percent, sales in the Midwest fell 6 percent and sales in the West were unchanged.
New home sales make up a relatively small part of the total U.S. housing market, compared with the approximately 5.5 million existing homes sold in 2002.
The pace of existing home sales fell last month as well, according to a report Tuesday by the National Association of Realtors, but was still the fourth-highest on record.
Mortgage rates have fallen consistently for several months, helping to raise demand for homes, increasing home prices and making homeowners richer. Many homeowners also have refinanced their mortgages, lowering their monthly payments and tapping some of their newfound home equity.
The combination of low rates and high home equity has helped support consumer spending, which makes up more than two-thirds of all U.S. economic growth.
Economists have long felt that when mortgage rates start to rise again they will slow down the housing market. But they've also hoped that the higher rates would accompany higher economic activity, offsetting any negative effects of a housing cool-down.
The report had little impact on U.S. stock prices, which were mixed in early trading. Treasury bond prices fell.
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