RISMEDIA, April 26, 2011—(MCT)—Sales of new homes rose 11.1 percent in March, the Commerce Department recently noted, marking a mild improvement from the worst-ever showing as the dampening effect of winter storms and an expiring California tax credit ware off.
The reading of a seasonally adjusted annual rate of 300,000 represented a 21.9 percent nosedive from March 2010 levels. However, the level beat a MarketWatch-compiled economist estimate of 290,000, and February’s low reading of 250,000 was revised up to 270,000.
Analysts had attributed February’s weakness in part to winter storms that depressed figures in the East and the Midwest, as well as the expiration of a California tax credit. The data in March bore out that view.
Sales in the Northeast jumped 66.7 percent, those in the Midwest improved 12.9 percent and those in the West increased 25.9 percent, while sales in the South edged 0.6 percent lower.
“With March sales gaining in every region except the South, the data are another reminder that activity readings in January/February were restrained by severe weather. Builder sentiment data and mortgage purchase applications have shown no collapse or subsequent surge,” says Steven Wieting, an economist at Citi.
But by region, sales are between 9.1 percent and 34 percent worse than the same period last year. The still-high unemployment rate, a glut of cheaper existing homes on the market and the large number of underwater mortgages have all combined to depress the market for new homes.
“Distressed sales continue to rob demand from new home sales and construction activity,” says Yelena Shulyatyeva, an economist at BNP Paribas.
On a three-month moving average—which reduces the month-to-month variance in the hugely volatile release—sales fell to a 294,000 rate from 305,000. The March reading has a margin of error of 21.7 percent, the Commerce Department said.
The median sales price rose 2.9 percent to $213,800 from an upwardly revised $207,700 in February, though they are 4.9 percent below selling prices from March 2010.
The average sales price actually fell 3.8 percent to $246,800, as the number of houses sold in the $400,000-to-$499,000 range dropped to 4 percent of the total from 9 percent of February’s total.
At the end of March, 183,000 houses were up for sale, representing a supply of 7.3 months at the current sales rate, down from a supply of 8.2 months in February.
Inventories are now at the smallest level since 1967 after a “relentless slide,” says David Resler, chief economist of Nomura Securities International. “This lean supply of unsold homes may give builders some hope —however faint—that a pickup in sales will require new construction,” he continues.
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