Home Sales Hit a Record Low, but Don't Blame the Weather

Last Updated Feb 24, 2010 1:51 PM EST

Sales of new homes fell in January to their lowest level since records began to be kept in 1963. The 309,000 homes sold marked an 11.2 percent decline from December, traditionally a month when people have better things to do than buy real estate.

The awful report on Wednesday is being blamed on snowstorms that hit much of the country. Nice try, but the amateur meteorologists on Wall Street were aware of the snow when they predicted a 5 percent sales increase.

The foul weather no doubt accounts for much of the 35.1 percent decline in sales in the Northeast noted in the Commerce Department report. But the weather was just fine in the West and it didn't stop sales there from falling 11.9 percent.

Another explanation for the weakness is that the stimulus programs last year, especially the tax credit on home purchases, did the trick - for a while. People who were shopping around for four walls took the discount, bought their dwellings and are living happily ever after. Other prospective buyers are too scared of losing their jobs, so they're sitting tight.

The home sale report seems to be shocking economists, although not investors. The stock market shrugged off the news and was trading higher Wednesday afternoon.

But with consumer confidence plunging, as noted here Tuesday, the housing data is just another sign that the only economic recovery is the ephemeral one engineered by Congress. Without something sturdier, the year-old bull market looks vulnerable.