New-Home Sales Rebounded
In March, but Prices Fell
by Jeff Bater
From The Wall Street Journal Online
April 26, 2006
New-home sales shot up at the highest rate in nearly 13 years during March, rebounding from back-to-back declines despite rising mortgage rates. But the median home price declined, further showing that the nation's five-year housing boom is slowing.
Meanwhile, demand for expensive goods surged during March more than triple the rate expected in an across-the-board increase of orders for the U.S. manufacturing sector.
Sales of single-family homes increased 13.8% to a seasonally adjusted annual rate of 1.213 million, the Commerce Department said Wednesday.
Wall Street had expected a much smaller increase in sales. The median estimate of 22 economists surveyed by Dow Jones Newswires and CNBC was a 3.2% advance to a 1.115 million annual rate.
The 13.8% surge was the strongest since 16.4% in April 1993. It followed a 10.9% decline in February and a 5.5% drop during January. Yet year over year, sales were down 7.2% since March 2005.
Borrowing costs are higher than a year ago. The average rate on a 30-year mortgage crept to 6.32% in March, higher than February's 6.25% and March 2005's 5.93%.
Commerce's report Wednesday showed March new-home sales rose 4.7% in the Northeast, 10.9% in the Midwest, 6.9% in the South and 35.7% in the West. The surge in the West was the biggest since a 37.7% gain in September 1986.
Home prices fell last month. The average price of a home decreased to $279,100, down from a revised $300,400 in February. The median price fell to $224,200 from a revised $239,900. The median price, the point where half the homes sold for more and half for less.
There were an estimated 555,000 homes for sale at the end of March, a new record. That represented a 5.5 months' supply at the current sales rate. An estimated 540,000 homes were for sale at the end of February, a 6.3 months' inventory. An estimated 119,000 homes were actually sold last month, up from 91,000 in February, based on figures not seasonally adjusted.
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