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Economy in Brief

U.S. New Home Sales Jump With Tax Credit, But It Still Took A Long Time To Close The Deal
by Tom Moeller April 23, 2010

It's not that an $8,000 home-buyer tax credit alone lifted March new home sales, it's that it will no longer be offered by the Federal government after next week.The result was that new home sales jumped 26.9% from February to 411,000 (AR). March sales were the highest level since last July but it followed four consecutive months of decline. The latest greatly exceeded of Consensus expectations for 325,000 sales.

Home prices dipped last month, but that followed a firm February increase. The net-result was a 4.3% price increase versus last March which was the cycle low. Nevertheless, prices remain down 18.5% from the 2007 peak.Price discounts have been lowering the inventory of unsold homes to its lowest level since 1991. At the current sales rate, the months' supply of unsold homes dropped to 6.7 from its 2009 high of 12.4 months. However, despite all this improvement it still took a record median 14.4 months to sell a new home as of March.

A rebound from severe winter weather probably helped sales in the Northeast. They rose by more than one-third from February and were double last year's level. That monthly increase failed, however, to make up the February decline. Sales in South also showed a hefty 43.5% rise m/m but were up just 18.5% from last March. Elsewhere, the credit's positive effect seemed smaller. Sales in the West sales rose 5.7% but they were up by one-quarter from last year while sales in the Mid-west rose just 4.3% after a 13.0% February decline.

US New Homes March February January Y/Y 2009 2008 2007
Total Sales (SAAR, 000s) 411 324 338 23.8% 372 481 769
  Northeast 38 28 41 100.0 31 35 64
  Midwest 49 47 54 11.4 54 69 118
  South 231 161 168 18.5 201 264 409
  West 93 88 75 25.7 87 113 178
Median Price (NSA, $) 214,000 221,600 215,800 4.3 214,500 230,408 243,742
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