New single-family home sales in March surged to the largest monthly percentage increase in 47 years after hitting a record low in February, according to a report by the U.S. Census Bureau and the Department of Housing and Urban Development.
The clock is ticking on the federal homebuyer’s tax credit — something that the building and brokerage industries lobbied hard to pass, as direct beneficiaries of stimulated sales.
And it’s working, the National Association of Home Builders and National Association of Realtors said in announcements this week.
New-home sales soared to an estimated seasonally adjusted annual rate of 411,000 in March, rising 26.9 percent from February’s upwardly revised — but still record low — annual rate of 324,000.
That’s the greatest percentage rise since April 1963, when the annual rate jumped 31.2 percent to 605,000 from 461,000 the month before. The sales rate rose 23.8 percent year-over-year.
In terms of raw numbers, March’s sales rose by 87,000 month-to-month, the biggest rise since October 2005 when sales rose by 92,000 to 1.3 million.
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"The near-record-breaking 27 percent increase over February was the result of homebuyers taking advantage of the tax credit as well as a carryover of demand that was held back by unusually bad weather in February," said David Crowe, NAHB’s chief economist.
"The increased sales are very welcome news and sales will continue to improve, although we expect them to plateau in late spring and early summer when the credit expires. Following that, the housing momentum will be carried forward by low interest rates, pent-up household formations, excellent affordability conditions and a budding employment growth," Crowe added.
"It’s obvious that homebuyers are rushing in to take advantage of the tax credit that’s set to expire," Robert Dye, senior economist for PNC Financial Services, told CNN.
Regionally, the Northeast saw a 100 percent year-over-year increase in the new-home sales rate, doubling to 38,000 from 19,000 in March 2009. The region also saw the second-fastest month-to-month increase, at 35.7 percent.
The South — which made up more than half of total sales at 231,000 — saw the fastest month-to-month rise, 43.5 percent. The region’s sales rose 18.5 percent year-over-year.
The West saw the second-biggest year-over-year jump in sales, 25.7 percent to 93,000 from 74,000 in March of last year. The region’s month-to-month sales rose 5.7 percent. …CONTINUED
The Midwest saw the smallest increases: 11.4 percent year-over-year to 49,000 from 44,000 from March 2009, and 4.3 percent month-to-month.
The non-seasonally adjusted sales figure for March was 38,000, rising 52 percent from February’s figure of 25,000 and 22.6 percent year-over-year.
New houses sold for a median $214,000, a 3.4 percent dip from February’s median price of $221,600 but a 4.3 percent rise from March 2009’s median of $205,100. The average price was $258,600, an 11.1 percent drop from February’s average, $290,900, and 0.5 percent lower than last year’s March average.
Three-quarters of homes sold for under $300,000 last month, compared with 78 percent in March 2009 and 74 percent in February. Thirty percent sold for between $200,000 and $299,000 in March.
At the end of the month, inventory was at a seasonally adjusted annual rate of 228,000 — a supply of 6.7 months at the current sales pace, according to the report. A supply of six months represents a rough equilibrium between a seller’s market and a buyer’s market, with a supply above six months possibly indicating a buyer’s market.
In a separate report by the National Association of Realtors this week, existing-home sales also rose in March: 16.1 percent year-over-year and 6.8 percent month-to-month. The association credited the federal homebuyer tax credit for the dramatic spike.
The credit — worth up to $8,000 for first-time homebuyers and up to $6,500 for repeat buyers — is set to expire April 30. Buyers must have signed a sales contract by that date and close on the purchase by June 30 to claim the credit.
According to the National Association of Home Builders, its FederalHousingTaxCredit.com site has received at least 10 million visits since its launch in July 2008 — about 3 million of those in the first three months of this year.
"NAHB went live with the site the same day the credit was signed into law in 2008, and it quickly became (a) premier source of information about the credit," said Bob Jones, NAHB’s chairman, in a statement.
With the tax credit expiring in a week, some are making a mad dash to get in under the wire. A developer in Chicago, Belgravia Group Ltd., is promoting a "Midnight Tax Dash" on April 29 and 30, for example, for homebuyers hoping to buy a unit in their new condominium development. The group reported that it will supply pizza and Red Bull energy drinks for the event.
The group has sold more than 85 out of 241 units so far this year, after reducing prices between 15 and 30 percent, the developer said.
"Will there be someone who wakes up on April 30 and says, ‘I think I’ll go buy a condo today?’ You never know. But there are certainly buyers out there who are on the fence, who could use a little extra time or reassurance, and we will work with those buyers right up to the deadline," said Alan D. Lev, president of Belgravia Group Ltd., in a statement.
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