New-home sales slip in March, but beat expectations

WASHINGTON -- USA-ECONOMY/HOUSING (URGENT):US home sales drop in March; inventories plummet

New-home sales dipped slightly last month, but still beat expectations as builders start to see long-awaited signs of life in the housing market — including a dip in the inventory of new homes for sale.

The Commerce Department said Friday that sales fell 0.6% 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 more than 6%.

New-home figures are notoriously volatile and subject to big adjustments.

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% from March 2008.

The median sale price of a new home fell to $201,400, a 12% 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 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% 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 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% in the West from a month earlier, and unchanged in the South. They sank more than 32% in the Northeast and nearly 8% 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% 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.