New-house purchases take off
Job creation key to keep momentum, analysts say
WASHINGTON – Sales of new homes broke out of a four-month winter slump with a bang in March, soaring 26.9 percent over February, the government said Friday, evidence that federal tax incentives for buyers due to expire next week are giving the housing market a boost.
The March figures were meager by historical standards, bouncing off an all-time low in February, and analysts said job creation was paramount for the momentum to sustain itself.
“It shows that the tax credit still has some punch, and we will probably see some better sales numbers for April,” said Mark Zandi, chief economist for Moody’s Economy.com. But “if we don’t get more jobs, the housing market is going nowhere.”
The news came one day after a report showed that sales of previously owned homes rose 6.8 percent in March. Although new-home sales make up a much smaller share of home-buying activity, economists are watching the data carefully as an indicator of whether the beleaguered construction industry will begin to add jobs.
Homebuilders’ stocks climbed, with the Standard & Poor’s index of 12 major builders increasing nearly 11 percent.
Last year, housing was a drag on economic growth, but that could turn this year, said David Crowe, chief economist for the National Association of Homebuilders.
New-home sales in March jumped the most in markets hit by February’s winter storms. They rose 43.5 percent in the South, 35.7 percent in the Northeast, 5.7 percent in the West and 4.3 percent in the Midwest.