April 24 (Bloomberg) -- Purchases of new homes in the U.S. last month were higher than anticipated, providing further evidence the market may be stabilizing.
Sales decreased 0.6 percent to an annual pace of 356,000 after a 358,000 rate in February that was stronger than previously estimated, the Commerce Department said today in Washington. The median sales price decreased 12 percent from March 2008, while inventories of unsold homes fell to a seven- year low.
Federal Reserve efforts to bring mortgage rates down combined with tax credits for first-time buyers are likely to support sales in coming months. Still, the highest jobless rate in a quarter century, tight credit and record foreclosures indicate purchases won’t rebound substantially.
“The housing market is trying to find a bottom,” said Roger Kubarych, chief U.S. economist at UniCredit Global Research in New York, who forecast 350,000. “Lower prices plus low mortgage rates should be generating a big rally; it isn’t. Sales aren’t rallying because the negative wealth effect is a big weight on households.”
Treasuries were lower and stocks gained after the report. The Standard & Poor’s 500 Index was up 0.7 percent at 857.49 as of 10:28 a.m. in New York. Benchmark 10-year notes yielded 2.98 percent, up 6 basis points from yesterday.
Forecasts
Economists forecast new home sales would be unchanged at a 337,000 annual pace, according to the median estimate in a Bloomberg survey of 68 economists. Forecasts ranged from 310,000 to 375,000.
The median price of a new home decreased to $201,400, the lowest level since December 2003.
Another Commerce report today showed orders for durable goods fell less than forecast in March, adding to signs the economic slump is easing. The 0.8 percent decrease compares with an anticipated 1.5 percent drop, according to the median of 68 estimates in a Bloomberg News survey of economists. The news was tempered by revisions to February figures that showed a 2.1 percent gain in orders, smaller than the government previously reported.
Sales of new homes were down 31 percent from March 2008. They reached a record 1.389 million in July 2005.
The 5.2 percent decrease in inventories exceeded the decline in sales. The number of homes for sale fell to a seasonally adjusted 311,000, the fewest since January 2002, and the supply of homes at the current sales rate dropped to 10.7 months’ worth, the lowest level in eight months.
Western Surge
Sales in March were led by a 15 percent surge in the West. Purchases plunged 32 percent in the Northeast. They were also down in the Midwest and were little changed in the South.
A report from the National Association of Realtors yesterday showed purchases of existing homes in March fell 3 percent to an annual rate of 4.57 million. The median price slumped 12 percent from a year earlier, and distressed properties accounted for about 50 percent of all sales.
Mounting foreclosures have drawn more buyers to the existing-home market. New-home sales now make up about 7 percent of the total market, down from about 16 percent at the peak of the housing bubble in mid-2005.
Other indicators are showing signs of a bottoming in housing. Homebuilder confidence has risen from a record low in January to a six-month high in April. Mortgage applications to purchase homes are also up after reaching a nine-year low in February as the Federal Reserve drove down lending rates.
KB Home, the Los Angeles-based homebuilder that is focusing on first-time buyers, is among companies seeing signs of improvement. The company last month reported a narrower first- quarter loss as orders increased for the first time in three years.
Still, analysts project an economy that has hemorrhaged 5.1 million jobs since December 2007 and consumer confidence near record lows means sales are likely to stabilize rather than rebound.
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