(Bloomberg News) 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.
New-home sales, tabulated when contracts are signed, climbed 11.1% to a 300,000 annual pace, faster than forecast, figures from the Commerce Department showed today in Washington. 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% 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.
"It's a nice rebound from February but the bottom line is housing is continuing to trend sideways," said Omair Sharif, an economist at RBS Securities Inc. in Stamford, Connecticut, who correctly forecast March sales. "Builders have been doing their bit in paring inventory but the problem is they're facing competition from distressed properties, high unemployment and prices that are still falling."
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.
Stocks held earlier losses after the report and Treasuries were little changed. The Standard & Poor's 500 Index fell 0.4% to 1,332.53 at 10:55 a.m. in New York. The yield on the benchmark 10-year note dropped to 3.38% from 3.39%.
The median sales price decreased 4.9% 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% surge in Northeast after a 54% 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.