High Borrowing Costs Hold Down Home Sales March Rebound Fails To Offset 12.5 Percent Plunge In February

New-home sales rose 3 percent in March but could not recover from February’s 12.5 percent plunge as high borrowing costs plagued the housing market.

The Commerce Department report Tuesday was the latest evidence Federal Reserve interest-rate increases have been successful in slowing the economy.

Sales of new single-family homes totaled 577,000 at a seasonally adjusted annual rate, up from a revised 560,000 in February, the Commerce report said. February sales originally were estimated to have fallen 14 percent, to a 551,000 rate.

But despite the March gain and the upward revision in February, sales during the first three months of 1995 still were 15.3 percent below those of the same period a year ago.

“Overall, we’re going to have a decline of over 10 percent in 1995 from 1994,” said Michael Carliner, an economist with the National Association of Home Builders, which is predicting a total of 599,000 sales this year.

Sales in the West registered the biggest gain, up 38.7 percent. Sales were up 11.7 percent in the Midwest, but fell 14.1 percent in the Northeast and dropped 13 percent in the South.