New-home sales surged in March
By Alejandro Lazo and Don Lee
McClatchy-Tribune News Service
WASHINGTON — Sales of new homes broke out of a four-month winter slump with a bang in March, soaring 26.9 percent over February, the government said yesterday, evidence that federal tax incentives for buyers due to expire next week are giving the housing market a boost.
The March figures were meager by historical standards, bouncing off an all-time low in February, and analysts said job creation was paramount for the momentum to sustain itself.
"It shows that the tax credit still has some punch, and we will probably see some better sales numbers for April," said Mark Zandi, chief economist for Moody's Economy.com. But "if we don't get more jobs, the housing market is going nowhere."
The news came one day after a report showed that sales of previously owned homes rose 6.8 percent in March. Although new-home sales make up a much smaller share of home-buying activity, economists are watching the data carefully as an indicator of whether the beleaguered construction industry will begin to add jobs in substantial numbers.
Home builders' stocks climbed, with the Standard & Poor's index of 12 major builders increasing nearly 11 percent.
Last year, housing was a drag on economic growth, but that could turn this year, said David Crowe, chief economist for the National Association of Homebuilders. Housing should contribute positively to the nation's first-quarter growth when the government's report on gross domestic product is released Friday, he said.
The data are estimates based on surveys and are reported as an annual sales pace adjusted to take seasonal variations into account. The March sales pace hit an annual rate of 411,000 homes.
February's revised annual rate of 324,000 was the lowest since the government began tracking such statistics in 1963. That made it easy for March figures to show a surge.
Zandi estimated that, stripping out the effects of February's inclement weather and the influence of the tax credit, last month's sales pace was closer to 350,000.
"The one thing to keep in mind is that these are still really horrible numbers," said Patrick Newport, U.S. economist for the consultancy IHS Global Insight. "The only reason they look good is February's were the worst numbers ever."
Sales are likely to fall once the tax credit expires but will recover later this year if the economy picks up steam, he said.