New-home sales jump 27%, biggest gain in 47 years

Sales of new homes surged 27% last month, bouncing off the previous month’s record low and blowing past expectations as better weather and government incentives boosted sales.The Commerce Department said Friday that new-home sales rose in March to a seasonally adjusted annual sales pace of 411,000. It was the strongest month since last July and the biggest monthly increase in 47 years.

Economists surveyed by Thomson Reuters had expected a sales pace of 330,000. February’s results were revised upward to 324,000, but remained an all-time low. Sales had been especially weak over the winter, partly due to bad weather in much of the country.

The median sales price was $214,000, up more than 4% from a year earlier but down more than 3% from February.

The new-home sales report reflects signed contracts to purchase homes rather than completed sales and thus gives economists a feel for how many buyers were out shopping for new homes in a given month.

It is likely capturing consumers who are trying to qualify for federal tax credits that will expire at the end of this month. The government is offering an $8,000 credit for first-time buyers and $6,500 for current homeowners who buy and move into another property.

To qualify, buyers must have a signed contract complete by the end of next week and must complete the transaction by the end of June. Nearly 1.8 million households have used the credit at a cost of $12.6 billion, according to the Internal Revenue Service.

The rise in new-home sales was seen nationwide. Sales grew a whopping 44% in the South and 36% in the Northeast. They also rose about 6% in the West and 3% in the Midwest.

The number of new homes up for sale in March fell 2% to 228,000. At the current sales pace, it would take nearly 7 months to exhaust that supply.

Source: Associated Press, by Alan Zibel (04/26/2010)

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