The U.S. economy is doing OK overall, but housing is in its own private hell. Still. That was borne out by the Census Bureau's report today that sales of new homes, seasonally adjusted, fell 16.6% from December to January. That was the biggest decline since January 1994.

It's going to take a long time to clear out the backlog of unsold homes unless sales accelerate. At January's sales rate, the inventory of unsold new homes was the equivalent of 6.8 months' worth of sales. That's up from 5.7 months' worth in December at that month's sales rate.

Sales were down all over but the West was worst with a 37% drop.

True, the monthly numbers bounce around a lot. November and December were warm, so they "stole" some sales from January. When you smooth things out by looking at a three-month rolling average, sales are about flat compared to previous periods. But more bad news is on the way: the subprime mortgage is melting down, which removes one big segment of buyers from the market.

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