U.S. new home market warms

More Americans bought new homes in March, helping give the battered industry a small lift after the worst winter for sales in almost a half-century.

The Commerce Department says new-home sales rose 11 per cent last month to a seasonally adjusted rate of 300,000 homes. That follows three straight monthly declines. But it remains far below the 700,000-a-year pace that economists view as healthy.

The median price of new homes sold in March had fallen 4.9% year-over-year.

“The 11.1% month-over-month rebound in March essentially retraces the downdraft in February, as the pace of sales in March is only slightly below the 312,000 observed in January,” commented Michael Gapen, director, U.S. economic research at Barclays Capital.

February’s home sales decline could likely be attributed to adverse weather conditions throughout the northern states, he said in a research note.

“We expect trends in housing activity to improve gradually as the economic backdrop firms, but we see the high level of foreclosures as continuing to exert downward pressure on home prices in the coming quarters.”

Last year was the fifth consecutive year of declines for new-home sales. Economists say it could take years before sales return to a healthy pace.

Poor sales of new homes mean fewer jobs in the construction industry. 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.