Mortgage applications rose 8.1% and refinancing applications surged. The 30-year fixed rate mortgage fell 15 basis points to 5.98% last week which was the lowest since October 2005.

Home builder stocks rose on the data which was further fueled by a Toll Bros., the luxury home builder. Report that they anticipate a market bottom. Additionally, Citigrop upgraded the home builder stock sector.

The monthly decline was the sharpest in 13 years showing continued weakness in the unsteady housing sector

According to the Commerce Department new single-family home sales fell to an annualized rate of 937,000 units from an upwardly revised rate of 1.123 million units in December of 2006.

In the Northeast, new home sales fell 18.7 percent while they decreased 8.1 percent in the Midwest and 9.7 percent in the South. The West saw the sharpest decline in new home sales with a 37.4 percent drop.