New home sales rise 27 pct in unexpected surge from record low

[WhatMoney]

Friday April 23, 2010

WASHINGTON (AP) -- Sales of new homes surged 27 percent last month, bouncing off the previous month's record low and blowing past expectations as better weather and government incentives boosted sales.

The Commerce Department said Friday that new home sales rose in March to a seasonally adjusted annual sales pace of 411,000. It was the strongest month since last July and the biggest monthly increase in 47 years.

Economists surveyed by Thomson Reuters had expected a sales pace of 330,000. February's results were revised upward to 324,000, but remained an all-time low. Sales had been especially weak over the winter, partly due to bad weather in much of the country.

The median sales price was $214,000, up more than 4 percent from a year earlier but down more than 3 percent from February.

The new home sales report reflects signed contracts to purchase homes rather than completed sales and thus gives economists a feel for how many buyers were out shopping for new homes in a given month.

It is likely capturing consumers who are trying to qualify for federal tax credits that will expire at the end of this month. The government is offering an $8,000 credit for first-time buyers and $6,500 for current homeowners who buy and move into another property.

To qualify, buyers must have a signed contract complete by the end of next week and must complete the transaction by the end of June. Nearly 1.8 million households have used the credit at a cost of $12.6 billion, according to the Internal Revenue Service.

The rise in new home sales was seen nationwide. Sales grew a whopping 44 percent in the South and 36 percent in the Northeast. They also rose about 6 percent in the West and 3 percent in the Midwest.

The number of new homes up for sale in March fell 2 percent to 228,000. At the current sales pace, it would take nearly 7 months to exhaust that supply.

http://finance.yahoo.com/news/New-ho...&asset=&ccode=

[keepinitreal]

The new home sales report reflects signed contracts to purchase homes rather than completed sales...

It is likely capturing consumers who are trying to qualify for federal tax credits that will expire at the end of this month. The government is offering an $8,000 credit for first-time buyers and $6,500 for current homeowners who buy and move into another property.

To qualify, buyers must have a signed contract complete by the end of next week and must complete the transaction by the end of June.

The number of new homes up for sale in March fell 2 percent to 228,000. At the current sales pace, it would take nearly 7 months to exhaust that supply.

Hopefully the $8000/$6500 will be renewed. Otherwise, there may be a huge drop-off in sales when it expires. That's surprising that the number of new homes up for sale dropped in March, when traditionally you'd expect more to be up for sale in the Spring.

[DeadManCrawling]

This is an astounding and encouraging number. I hope the credit is extended, too, but it realistically can only be extended for a while.

In an alternative way, though, this might not bode well for the sales of existing homes later in the year, when the foreclosure market is expected to be even more saturated than it already is. BoA is planning an increase of 800%, I believe, in foreclosures. Many millions of homes will come onto the market, and we may be at risk of seeing the wheels stop again.

This, though, is better news than anyone could have expected, given unemployment and the still-wacky credit markets.

[HHM]

Yep, this is the rush to buy right before the tax credit expired.

In the big picture, the housing market has years to go.

[BobMango]

I hope they don't extend the credit. We're just delaying the pain with another government program to redistribute wealth.

What needs to happen is for some sanity to reenter the market. Continued government intervention is pretty much the opposite of that.

[banca rotta]

The US Treasury is on it's way to bankruptcy and this is just another catalyst.


For now the blowhards in the media are celebrating this big nothing, but just wait.

[banca rotta]

Hopefully the $8000/$6500 will be renewed. Otherwise, there may be a huge drop-off in sales when it expires. That's surprising that the number of new homes up for sale dropped in March, when traditionally you'd expect more to be up for sale in the Spring.

You pretty much explained why this is no recovery. The govt is "stimulating" the economy and once they withdraw it will collapse under it's own weight.

Sooner or later the training wheels have to be removed so the cyclist can ride on his own.

[feelingnutsy]

If this trend/cycle follows what happened after cash for clunkers---ker-thunk.

[catleg]

Lying with statistics, or, how to keep homedebtors making the payments on their underwater mcmansions.

[Flamingo]

It's a buyers market...no one wants a 20 year old house for $200,000 when new ones of the same size with all sorts of new stuff are going for $200,000. It is going to be a while before older homes start to move and in order to do that they will have to drop prices even lower...really bad for sellers of older homes out there...

[banca rotta]

It's a buyers market...no one wants a 20 year old house for $200,000 when new ones of the same size with all sorts of new stuff are going for $200,000. It is going to be a while before older homes start to move and in order to do that they will have to drop prices even lower...really bad for sellers of older homes out there...

I heard on some business news station someone said that with "normal" economic growth it will take about 40 years for some of the underwater homes just to get back to break even where the house price is the same as the outstanding mortgage.

Obviously the govt won't wait the 40 years so they are purposely creating massive inflation to get to this point faster.

As we can see there is no fixing this problem at least in the short term. All they can do is manipulate markets and the currency and pray.