New home sales rose 11.1 percent in March

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Purchases of new houses in the U.S. rose in March from a record low as the weakest industry in the economy strained to recover,Bloomberg News reports.

New-home sales, tabulated when contracts are signed, climbed 11.1 percent to a 300,000 annual pace, faster than forecast, figures from the Commerce Department showed. The median estimate in a Bloomberg News survey called for a rise to 280,000. Housing prices fell from a year ago.

The market for new homes faces competition from a glut of foreclosed properties that may keep prices depressed this year, discouraging new construction. Unemployment above 8 percent and housing’s struggles help explain why the Federal Reserve may announce at the end of this week’s policy meeting that it plans to complete the purchase of $600 billion of Treasuries by June.

Estimates in the Bloomberg survey of 68 economists ranged from 247,000 to 300,000. Sales in February were revised to a 270,000 annual rate from a 250,000 previously reported.

The median sales price decreased 4.9 percent from the same month last year, to $213,800, today’s report showed.

Purchases rose in three of four U.S. regions last month, led by a 67 percent surge in Northeast after a 54 percent slump a month earlier. Sales in the South were little changed at a 162,000 pace after February’s 163,000.

The supply of homes at the current sales rate fell to 7.3 month’s worth in March from 8.2 months. There were 183,000 new houses on the market at the end of March, the fewest since August 1967, indicating builders are reducing construction.

Previously-owned home purchases climbed 3.7 percent to a 5.1 million annual rate in March as a mounting supply of properties in or near foreclosure lured investors, a National Association of Realtors report showed April 20. All-cash deals accounted for 35 percent of the transactions, the most on record, while distressed properties including foreclosures and short sales made up 40 percent of all deals, the group said.

New-home sales are considered a more timely barometer than purchases of previously owned homes, which are calculated when a contract closes. Resales account for about 95 percent of the housing market so far this year.

Housing demand gyrated in 2010, reflecting a boost from a homebuyer tax incentive of as much as $8,000 that gave way to a plunge in sales by mid-2010 after the credit ended.

While sales have steadied, they have yet to strengthen, keeping builders pessimistic. The National Association of Home Builders’ confidence index fell to 16 this month from 17 in March. A reading under 50 means a majority of builders view conditions as poor. Read More.

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