US new-home sales reached a record low in February, even while other economic indicators showed a rebound, with the pace of hiring expanding. The numbers reveal the continued dysfunction of the housing market, and how this will impact the greater economy.

The sale of newly built homes in the US hit its lowest level in February since records began in 1963.

In a further sign that the housing slump continues to deepen, only 250,000 new homes were sold in the month, on a seasonally-adjusted annualised basis.

The figure was down 17% from January, the third monthly fall in a row.

As homebuilders struggle to compete with a new wave of repossessed houses hitting the market, the median price of new home sales fell 14%.

That median price sits at December 2003 levels. And even despite that, the price of new home sales is 30% higher than existing home sales, because the latter includes foreclosed properties which go at bargain-basement rates. Existing home sales also fell sharply in February. And you have another 3 million home repossessions expected this year.

Floyd Norris comments:

Based on seasonally adjusted annual rates, here are the 20 slowest months since 1963. I’ve italicized the ones that came before the housing market peaked in 2006. There are only four.

1- Feb-2011: 250,000
2- Aug-2010: 274,000
3- Oct-2010: 280,000
4- May-2010: 282,000
5- Jul-2010: 283,000
6- Nov-2010: 286,000
7- Jan-2011: 301,000
8- Jun-2010: 310,000
9- Sep-2010: 317,000
10- Dec-2010: 333,000
11- Sep-1981: 338,000
12- Jan-2009: 339,000
13- Apr-1982: 339,000
14- Apr-2009: 341,000
15- Feb-2010: 347,000
16- Jan-2010: 349,000
17- Mar-2009: 350,000
18- Dec-2009: 356,000
19- Oct-1981: 356,000
20- Sep-1966: 358,000
Last spring there was a small revival in sales of new homes. We knew then that it was brought on by a temporary tax credit for buyers, and when sales fell off in the summer we could explain that as an equally temporary phenomenon, the result of sales being brought forward by the credit.

Now those temporary effects should have gone away. Instead, sales get worse and worse.

Norris was being charitable by giving the top 20. The entire top ten comes from this year and last. And three of the four unrelated months in the top 20 come from the last major recession of 1981-82. You cannot make people buy homes who don’t have the money, and given the absolute horrors of the housing market, you can no longer fool people as easily into buying a new home.

If you want to know why the Obama Administration is pushing a quick mortgage settlement to save up to 3 million homes, this is it. The housing market is on life support, and curing millions of mortgages is probably one of the few ways to fix that. And without a housing recovery, it’s hard to see an economic recovery.