Gloom continues in US homes market

There is no respite from the gloom in the US housing market, where the number of new homes sold unexpectedly fell last month and prices remain down on the previous year.

The disappointing data came a day after the Federal Reserve cited the depressed housing market as a key reason it plans to keep interest rates at zero for almost another three years.

The Commerce Department said yesterday that sales of newly built homes fell 2.2 per cent in December to an annualised rate of 307,000, bringing to a halt three months of modest rises.

The total number of new homes sold last month was 21,000, the second worst month on record. Housebuilders have scaled back activity because of competition from bank foreclosure sales, throwing construction workers out of their jobs.

In his State of the Union address this week, President Barack Obama also put the issue at the heart of his legislative programme, promising government help for mortgage refinancings which he hopes will stem the tide of foreclosures.

The President is yet to publish details of the plan, including its size and the scale of the bank tax he hopes to use to pay for it. Political observers gave it long odds of passing.