The Real Estate Market Receives Another Boost
The Fed-induced recovery in the real estate market continues to gain momentum, as new single-family home sales in the United States rose in March.
On Tuesday, the Commerce Department reported that purchases on new homes, measured by contracts signed, increased 1.5 percent to a seasonally adjusted 417,000-unit annual pace last month, compared to the revised February rate of 411,000 units. Home sales were up 18.5 percent compared to March 2012. However, as the chart below shows, the real estate market is still well below its glory days.
Economists polled by Reuters expected sales to increase to a 420,000-unit rate last month, while 76 economists surveyed by Bloomberg called for new home sales to reach 416,000 units in March.
The Commerce Department also reported that the median sales price of new houses sold in March 2013 was $247,000, up 3.0 percent from a year earlier. The average sales price came in at $279,900. Although low interest rates and inventory levels have been supporting the real estate market, the average sales price in March was the lowest since June 2012.
The seasonally adjusted estimate of new houses for sale at the end of March was 153,000 units. This represents a supply of 4.4 months at the current sales rate, near record lows and unchanged from February. The all time record for supply hit 12.1 months in January 2009.
In morning trading, home-builder stocks such as Lennar (NYSE:LEN) and PulteGroup (NYSE:PHM) both jumped 6.0 percent. Toll Brothers (NYSE:TOL) surged nearly 9.0 percent. Meanwhile, shares of Lowe’s (NYSE:L) gained 1.3 percent.
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