Sales of new homes rose 11.1% in March from February, the Commerce Department said Monday, marking a mild improvement from the worst-ever showing as the effect of winter storms and an expiring California tax credit wore off.
The still-bleak reading of a seasonally adjusted annual rate of 300,000 sales represented a 21.9% nose dive from March 2010 levels.
However, the level beat a MarketWatch-compiled economist estimate of 290,000, and February’s low reading of 250,000 was revised up to 270,000.
Analysts had attributed February’s weakness in part to winter storms that depressed figures in the East and the Midwest, as well as the expiration of a California tax credit. The data in March bore out that view.
Sales in the Northeast jumped 66.7%, those in the Midwest improved 12.9% and those in the West increased 25.9%, while sales in the South edged 0.6% lower.
By region, sales are 9.1% to 34% worse than the same period last year. The still-high unemployment rate, a glut of cheaper existing homes on the market and the large number of underwater mortgages have all combined to depress the market for new homes.
“Distressed sales continue to rob demand from new-home sales and construction activity,” said Yelena Shulyatyeva, an economist at BNP Paribas.
On a three-month moving average — which reduces the month-to-month variance in the volatile release — sales fell to a 294,000 annual rate from 305,000. The March reading has a margin of error of 21.7%, the Commerce Department said.
The median sales price rose 2.9% to $213,800 from an upwardly revised $207,700 in February, though prices are 4.9% below those from March 2010.
The average sales price fell 3.8% to $246,800, as the number of houses sold in the $400,000-to-$499,000 range dropped to 4% of the total from 9% of February’s total.
At the end of March, 183,000 houses were for sale, representing a supply of 7.3 months at the current sales rate, down from a supply of 8.2 months in February.
Inventories are at the smallest level since 1967 after a “relentless slide,” said David Resler, chief economist of Nomura Securities International.
“This lean supply of unsold homes may give builders some hope … that a pickup in sales will require new construction,” he said.