US new home sales hit record low as cold weather bites

Tax credits for first-time buyers have been extended until April

Sales of new homes in the US fell to their lowest level on record in February as the cold weather discouraged buyers, figures have shown.

Sales fell by 2.2% to a seasonally-adjusted annual rate of 308,000, down from a revised rate of 315,000 in January, the Commerce Department said.

It was the fourth consecutive monthly fall in home sales and a much lower figure than economists had expected.

Figures released on Tuesday showed existing home sales also falling.

"The housing market is really struggling to find its footing despite huge government support efforts. The near-term outlook for the housing market remains quite poor," said Zach Pandl at Nomura Securities.

Home sales have fallen every month since October. This is partly explained by the extension in tax credits for home buyers, which were due to expire in November before being extended to April.

There had been a sharp upturn in sales before November as buyers rushed to take advantage of the credits. Once they were extended, the incentive to buy disappeared.

If there is no pick-up in sales in March and April as buyers look to take advantage of the credits, analysts say, fears about the longer-term prospects for the housing market will heighten.

The median sales price for February was $220,500 (£147,971).