WASHINGTON — More people bought new homes in March, giving the battered homebuilding industry a small lift after the worst winter for sales in almost a half-century.
By J Pat Carter, AP
The Commerce Department says new-home sales rose 11% last month to a seasonally adjusted rate of 300,000 homes. That follows three monthly declines. But the pace remains far below the 700,000 homes a year economists consider healthy.
Last year was the fifth year of declines for new-home sales. Economists say it could take years more before sales return to a healthy pace. Poor sales of new homes mean fewer jobs in construction, which normally powers economic recoveries following recessions. Each new home creates an average of three jobs for a year and $90,000 in taxes, according to the National Association of Home Builders.
The median price of a new home rose nearly 3% from February to $213,800. New-home prices are about 34% higher than the median price of re-sales — more than twice the markup in healthy housing markets.
The seasonally adjusted number of new homes for sale in the United States is the fewest since summer 1967.Many builders are waiting for the glut of foreclosures and other distressed properties to be cleared before stepping up construction. But with 1.2 million foreclosures forecast this year nationwide, according to foreclosure tracker RealtyTrac, a turnaround isn’t expected for years.
Builders have struggled to compete with a wave of foreclosures and short sales — when a lender agrees to let a borrower sell a home for less than its market value. High unemployment, tight credit and a lingering fear that prices will fall further have kept people from making home purchases.
Residential construction has all but come to a halt. Building permits, a gauge of future construction, sank in the winter to their lowest level in more than 50 years before recovering somewhat in March. But that improvement was spurred by a more than 28% jump in permits for apartment and condo construction. That suggests builders believe people are flocking to rentals, not homeownership.
New-home sales rose in most regions of the country. Sales jumped nearly 67% in the Northeast, which was hit hard by winter weather; they rose almost 26% in the West; and nearly 13% in the Midwest. Sales fell 0.6% in the South, the nation’s biggest home-sale market.
Given the pace of new-home sales, it would take more than 7 months to clear them off the market. Economists say a six-month supply is healthy.
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