New U.S. home sales dipped slightly last month, but still beat expectations as builders start to see long-awaited encouraging signs about the housing market—including a dip in the inventory of new homes for sale.
The Commerce Department said Friday that sales fell 0.6 percent in March to a seasonally adjusted annual rate of 356,000 from an upwardly revised February rate of 358,000. February's results were adjusted upward by more than 6 percent.
March's results exceeded the expectations of economists surveyed by Thomson Reuters who expected a sales pace of 340,000 units. Sales were still down nearly 31 percent from March 2008.
The median sales price fell to $201,400, a 12 percent drop from a year earlier. The median price is the midpoint, where half sell for more and half for less.
Prices are likely to remain weak for months as builders continue to clear out their stock of unsold homes. There were 311,000 new homes for sale at the end of March, down 5.2 percent from 328,000 in February.
At the current sales pace, the government said it would take almost 11 months to exhaust the supply of new homes on the market.
The glut of unsold homes and competition from deeply discounted foreclosed properties puts even more downward pressure on prices and on builders' profits.
The report measures signed contracts to buy new homes rather than completed sales, so March's results could reflect the early impact of a new a new $8,000 tax credit for first-time buyers signed by President Barack Obama in mid-February.
Sales varied dramatically around the country, rising more than 15 percent in the West from a month earlier, and were unchanged in the South. They sank more than 32 percent in the Northeast and nearly 8 percent in the West.
In the market for previously occupied homes—a far larger market—the spring selling season is off to a lackluster start.
Sales fell 3 percent to an annual rate of 4.57 million in March month from a downwardly revised pace of 4.71 million units in February, the National Association of Realtors said Thursday.
The results were "a little disappointing" given that homes are more affordable than they've been in years and mortgage rates are near record lows, said Lawrence Yun, the group's chief economist.
The median sales price in March was $175,200, a plunge of 12.4 percent from a year ago, but higher than February's median price of $168,200.
While median sales prices typically rise slightly in early spring, the 4 percent monthly increase was larger than expected.
Yun also pointed to a strong sales recovery in western cities, where prices have plunged the most.
He said the rest of the country could start to see sales improve by early summer.
Real estate agents are getting calls from first-time buyers looking to take advantage of a new $8,000 tax credit. And that should give a boost to sales figures for early summer.
As unemployment grows and fallout from the mortgage crisis continues, foreclosures and distressed sales are dominating the market -- especially in California, Florida, Nevada and Arizona.
The Realtors group estimates that about half of sales nationwide are from foreclosures or other distressed property sales.
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