April 22 -- Sales of U.S. previously owned homes rose in March for the first time in four months as buyers took advantage of a government tax credit and the weather improved.
Purchases climbed 6.8 percent to a 5.35 million annual rate, more than anticipated, from a 5.01 million pace in February, figures from the National Association of Realtors showed today in Washington. The median prices climbed 0.4 percent from March 2009.
The thawing out from Februarys blizzards probably helped the market last month, while the Obama administrations credit worth up to $8,000 may keep underpinning demand through June, when it's next due to lapse. The outlook for the second half of the year depends on the speed and magnitude of the recovery in the job market, indicating the housing rebound may be slow to develop.
You have some fundamental improvement in housing, said Stuart Hoffman, chief economist at PNC Financial Services Group. Inc. in Pittsburgh. Housing is coming back. It's still got a long way to go.
Existing home sales were forecast to rise to a 5.29 million annual rate, according to the median estimate of 76, economists in a Bloomberg News survey, from a previously reported 5.02 million rate in February. Projections ranged from 5.05 million to 5.5 million.
Fewer Claims
Other reports today showed the number of claims for jobless benefits dropped last week and whole prices climbed in March.
Stocks held earlier loses after the report on concern of rising government debt levels in Europe and disappointing forecasts at Nokia Oyj, EBay Inc. and Qualcomm Inc.
The Standard & Poor's 500 Index dropped 0.9 percent to 1,194.85 at 10:24 a.m. in New York.
Purchases of existing homes were up 20 percent compared with a year earlier, before adjusting for seasonal variations. The median price creased to $170,700 from $170,000 a year ago.
The number of previously-owned homes on the market increased 1.5 percent to 3.58 million. At the current sales pace, it would take 8 months to sell those houses compared with 8.5 months at the end of the prior month.
First-Time Buyers
The share of homes sold to first-time buyers increased to 44 percent, from 42 percent in February and 40 percent in January, Lawrence Yun, the Realtors groups chief economist said, showing the influence of the tax incentive.
The tax credit has done its job, Yun said at a press conference. It's brought more buyers into the market and has helped stabilize prices, he said.
Today's report showed sales of existing single-family homes increased 7.3 percent to an annual rate of 4.68 million. Sales of multifamily properties, including condominiums and townhouses, rose 3.1 percent to a 670,000 pace.
Purchases climbed in all four regions of the country. Demand increased 7.2 percent in the Midwest, 7.1 percent in the South, 6.6 percent in the West and 6 percent in the Northeast.
The Commerce Department may report tomorrow that new home sales, which are recorded at the time contracts are signed, rose last month after falling to a record low in February.
Reports last week showed builder confidence climbed in April and housing stars in March reached the highest level in more than a year, while building permits increased to the highest point since October 2008.
Tax Credit
The Obama administration extended a tax credit for first- time homebuyers in November and expanded it to include some current owners. The deadline for signing contracts is the end of this month, and the transactions must be completed by June 30.
Sales of existing houses, which account for 90 percent of the housing market, are tabulated at contract closings, meaning demand may remain elevated through June. Purchases of new houses, due from the Commerce Department tomorrow, reflect signings, indicating the credits maximum influence will be evident in the March and April data.
Foreclosures may also dictate the direction of the housing market after the tax incentive is over. Filings rose 16 percent in the first quarter from a year earlier and bank seizures reached a record, according to Irvine, California-based RealtyTrac Inc.
More Affordable
While hurting household finances by driving property values, foreclosures are also making the market affordable to more buyers. At the same time, they create increased competition for builders, hurting profits.
Some builders are finding ways to protect earnings. Lennar Corp., the third-biggest U.S. homebuilder by revenue, last month said its quarterly loss narrowed after it cut administrative costs and trimmed incentives to buyers. The Miami-based company also is investing in failed bank loans and distressed real- estate assets to boost revenue.
Lennar also benefited from selling in communities with less competition from foreclosures, Chief Executive Officer Stuart Miller said March 24.
--With assistance from Oshrat Carmiel in New York. Editor: Carlos Torres
To contact the reporter on this story: Courtney Schlisserman in Washington at +1-202-624-1943 or cschlissermabloomberg.net
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John Kepple
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