New-Home Sales in West Surge 24% in March

Sales of new U.S. homes rose in March, after three straight months of declines, as a sharp rise in sales in the West offset weakness in the rest of the country, the government said Thursday.

Sales rose 2.1% to a seasonally adjusted annualized rate of 909,000 units--well above the 876,000 forecast by analysts in a Reuters poll--compared with a revised February rate of 890,000. The rate for February was originally reported as 881,000 units. March sales were up 8.7% from the same month last year.

Analysts said continued low mortgage rates and strong consumer demand fueled by the low unemployment levels were keeping new-home sales near the record level hit last November.

The West was the only area of the country where sales rose last month, jumping 24% to an annual rate of 274,000 homes from 221,000 in February. That’s the largest increase in the West since a 31% surge in March 1995.

In the Northeast, sales fell 2.5% from February to 79,000. In the Midwest, sales fell 6.4% to 161,000. And, in the South, sales fell 4.8% to 395,000.

After very high levels in November, sales dropped in December, January and February to slower but still strong levels.

William Sharp, an economist with Chase Securities in New York, said despite the rise in March sales, he expects activity to cool off to more sustainable levels of growth.

“We’ll continue slowly to grind downward but not break below the 800,000 level,” he said. “The housing sector is seen as very robust but just off the record pace that we saw late last year.”

Nationwide, the median price of new homes fell 1.5% in March to $153,000 from $155,400 in February.

Sharp said that house prices are rising, but at a slowing pace. “The price levels are record highs in both new-home sales and existing-home sales, but the growth rate is slowing pretty substantially,” he said.

The number of new houses on the market rose to an annual rate of 302,000, the highest level since January 1997. At current inventory levels it would take 4.1 months for all homes on the market to sell, compared with 4 months in February.

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New-Home Sales

Seasonally adjusted annual rate, in thousands of units:

March: 909,000 units

Source: Commerce Department