US new-home sales off 7 percent in March

Associated Press Modified: April 24, 2012 at 12:30 pm •  Published: April 24, 2012
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WASHINGTON (AP) — Sales of new homes fell in March by the largest amount in more than a year, indicating that the U.S. housing market remains under strain despite some modest signs of improvement.

The Commerce Department said Tuesday that sales dropped 7.1 percent in March to a seasonally adjusted annual rate of 328,000 units. That followed a 7.3 percent increase in sales in February. This figure was revised up from an initial estimate that February sales had fallen 1.6 percent.

The weakness in March could reflect that a warmer-than-normal winter caused sales that normally occur at the start of the spring sales season in March to occur in February instead.

The median sales price was $234,500 in March, down 1 percent from the February price.

Sales of new homes stand at just about half the roughly 700,000-a-year pace that analysts consider evidence of a healthy market.

The supply of unsold new homes fell to just 144,000 in March — the fewest on records dating to 1963. The supply has been falling over the past two years as builders have cut back on construction.

Michael Gapen, an economist at Barclays Research, said the low inventory level should trigger a moderate pickup in housing construction in coming months and provide some support to the economy.

Last week, the National Association of Realtors reported that sales of previously owned homes fell 2.6 percent in March to a seasonally adjusted annual rate of 4.48 million units. For previously owned homes, economists consider a healthy annual sales rate to be roughly 6 million.

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