New home sales rise; housing recovery on track

Sales of new U.S. single-family homes rose in March, indicating the housing market recovery remains on track.

The Commerce Department said on Tuesday sales increased 1.5 percent to a seasonally adjusted annual rate of 417,000 units. Last month’s rise followed a 7.6 percent drop in February.

Economists polled by Reuters had expected sales to rise to 420,000-unit rate last month.

Compared with March 2012, sales were up 18.5 percent, indicating the strength in the housing market that has helped boost the economy was on course. Sales are being set back by a lack of supply of homes on the market in some major parts of the country.

While the inventory of new homes on the market rose 2.0 percent to 153,000 units, it was not far from record lows.

At March’s sales pace it would take 4.4 months to clear the houses on the market, the same pace in February.

A supply of six months is normally considered as a healthy balance between supply and demand. The low months’ supply should push up new home prices.

The median sales price for a new home was $247,000, up 3.0 percent from a year ago.

Sales last month in the Northeast surged 20.6 percent and rose 19.4 percent in the South. Those gains were partially offset by declines in the West and Midwest.