Thursday, March 24, 2005

U.S. New-Home Sales Jump 9.4% in February

Dow Jones Newswires

WASHINGTON -- New-home sales recovered during February more than twice as much as expected, resuming a zigzag path as relatively low borrowing costs combine with job and income growth to bolster demand.

New single-family home sales increased 9.4% to a seasonally adjusted annual rate of 1.226 million, the Commerce Department said Thursday. It was the sharpest increase since December 2000's 11.7% jump.

January home sales declined an upwardly revised 8.6% as the government raised the annual rate to 1.121 million from an earlier estimated 1.106 million.

Wall Street expected a lower level of sales for February. In a Dow Jones Newswires-CNBC survey, 20 economists said sales would rise 4% to a 1.15 million annual rate.

Home sales have been bouncing up and down month to month but remain at a level analysts consider strong. Year over year, demand rose 5.2% in February compared to 12 months earlier.

Since July, the average 30-year mortgage rate has remained below 6%. The rate, however, began creeping upward this month, averaging 5.95% last week, according to Freddie Mac (FRE). Some analysts say sales will wane after borrowing costs pass the 6% mark. But economists are confident demand will stay strong, citing gains in employment and income among Americans.

Commerce's report Thursday showed new-home demand up in all four regions in the U.S. during February. Sales rose 20.3% in the Northeast, 9.9% in the Midwest, 9% in the South and 7.4% in the West.

The inventory of homes on the market slipped in February to a 4.4 months' supply from January's 4.6 months' supply.

Average and median home prices climbed in February. The average price was $ 288,400, compared with a revised $276,800 in January. The median price was $230, 700, up from a revised $210,400.

An estimated 444,000 homes were actually sold in February, up from 437,000 in January, based on figures not seasonally adjusted.

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