From the WSJ:
Sales of new homes increased in March from a record low a month earlier, a small boost for a struggling part of the U.S. economy.
Sales grew 11.1% on a monthly basis to a seasonally adjusted annual rate of 300,000 in March, the Commerce Department said Monday. Results for the previous two months were revised upward, but February remained the worst month on the government’s records, which go back to 1963.
Economists cautioned against concluding that the new-homes market is on the rebound.
“Even with this improvement, the data on new home sales has remained in a very depressed range,” over the past year, wrote J.P. Morgan economist Daniel Silver. While sales of previously occupied homes have shown modest improvement over the past year, the market for new homes is faring far worse, he noted.
“It is not hard to have a large percentage increase in sales when you are coming off the lowest level since records started being kept,” wrote Joel Naroff, president of Naroff Economic Advisors, in a note to clients. “We need to more than double the March sales pace to reach decent sales levels.”
Economists surveyed by Dow Jones Newswires had predicted the March sales rate would rise 14.8% to an annual rate of 287,000. Sales, however, were down 21.9% from March 2010.
Coming off the worst year for new home sales on record in 2010, the housing market continues to struggle to recover from a painful bust.
With demand soft, prices have been weak. The median sales price for a new home sold last month was $213,800, up 2.9% from $207,700 a month earlier, but down 4.9% from the same month last year.
Sales of new U.S. homes
rose in March and the number of properties on the market was
its lowest since the 1960s, but further gains will be hampered
by stiff competition from a glut of previously owned houses.
Single-family home sales rose 11.1 percent to a seasonally
adjusted 300,000 unit annual rate, the Commerce Department said
on Monday, up from 270,000 in February. Economists had expected
a 280,000-unit pace.
Despite last month’s rise, new home sales are just bouncing
along the bottom.
The market for new homes is being squeezed by competition
from previously owned homes and a deluge of foreclosed
properties, even though inventories in March fell to 183,000
units — the lowest since August 1967.
“The rebound in new home sales was encouraging, but the
March sales pace merely brings us back to the underlying trend
and indicates that housing continues to bounce around
historical lows,” said Omair Sharif, an economist at RBS in
It is interesting what registers as good news these days in the housing market.
People are making a big deal out of today’s new homes sales number as perhaps finally the sign that the housing sector is rebounding. On Monday, the Census reported that new housing sales rose 11% in March. This was greeted as generally good news. Nationwide, 29,000 new homes were sold and it puts the market on pace to clear 300,000 homes in 2011. It’s the first month that new home sales have jumped, and they were up in the double digits. So this is good news, no? Not really.
The March numbers were up from February. But February’s sales pace of 270,000 was the lowest on record since the Census began tracking the number in 1961. So beating that number is a little clearing the first round in whatever is the opposite of limbo. What’s more, on a year over year basis, March sales were actually down 22% from a year ago. And that might be the more important number. Despite the fact that the Census says it seasonally adjusts the number, new housing sales seem to always jump in March, perhaps because of the better weather. Perhaps because people are often looking to move in during the summer. New home sales even jumped in March in 2008, which was an all-round horrible year for housing and the economy. Based on that, last month’s jump, which was smaller that others, isn’t that meaningful.