Sales of new homes dropped more in January 2006 than analysts predicted, the U.S. Commerce Department reported Monday (Feb. 27, 2006). That worried housing experts, who hoped January’s warmer-than-normal weather would spur home shopping.

On the other hand, according to the Associated Press, prices for home sales rose during the month. The national median price for a home climbed to $238,100, up 4 percent from December. However, the price was well below the all-time high of $243,900 set in October 2005.

New home sales nationally during January slipped 5 percent behind December 2005 figures, resulting in an unsold backlog of more than a half-million units. Regionally, the Northeast was hardest hit, with a 14.9-percent decline from the previous month. To counter the slide, the National Association of Home Builders said 41 percent of builders were offering free amenities or other incentives as inducements to buyers.

Mortgage rates have been rising gradually with federal interest rates, which in turn has affected sales. Freddie Mac reported a 30-year fixed rate mortgage is now at 6.26 percent; industry observers believe rates will rise to between 6.5 and 7 percent by year’s end.

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