New U.S. Home Sales Unexpectedly Rise 4.7% as Dropping Prices Lure Buyers

[Purveyor]

Source: Bloomberg

By Shobhana Chandra

March 25 (Bloomberg) -- Purchases of new homes in the U.S. unexpectedly rose in February from a record low as plummeting prices and cheaper mortgage rates lured some buyers.

Sales increased 4.7 percent to an annual pace of 337,000 after a 322,000 rate in January, the Commerce Department said today in Washington. The median sales price fell 18 percent, and unsold homes at the current sales pace were the fewest since June 2002.

Demand for new homes has been limited by the highest jobless rate in a quarter century and shrinking household wealth, a sign housing may stay in recession until steps to cut borrowing costs and reduce mortgage defaults take hold. Sales of previously owned homes unexpectedly rose last month as buyers snatched up foreclosed properties at bargain rates.

``The housing slump may be nearing a bottom,'' David Resler, chief economist at Nomura Securities International Inc. in New York, said before the report. ``However, we would expect sales and other metrics of housing activity to recover only gradually.''

Economists forecast new home sales would drop to a 300,000 annual pace from an originally reported 309,000 rate in January, according to the median estimate in a Bloomberg survey of 65 economists. Forecasts ranged from 280,000 to 340,000.

Read more: http://www.bloomberg.com/apps/news?pid=20601087&sid=aAZ...

[PSPS]

1. Gee, prices go down, sales go up! What a surprise!

In most major markets, foreclosures make up over half of sales. The market is still moribund due to the disparity between median prices and median incomes. Nevertheless, I expect the talking heads to start screaming "Botum!!1!1!"

[Winterblues]

2. The wealthy are about to make their killing

They are about to swoop down and buy up a substantial part of America at bargain basement prices so they can add to their already obscene wealth. The one good thing about it though is prices will begin to come back up for those of us that haven't yet been forced from their homes. The great American Heist and Republicans are going to try and pin it on the Democrats so they can do it again in another decade or so. It is becoming a pattern for them, but they are getting a lot more blatant about it..

[slackmaster]

3. I haven't seen anything like that happening

It's still much harder to get financing for an investment property than owner-occupied.

[Winterblues]

4. You think the wealthy need financing?

They buy low and sell high and still have most of their immense wealth.

[WriteDown]

5. How many millionaires have bought empty houses in your

neighborhood? The profit is not in buying residential homes. Its in buying commercial real estate or very large tracks of unoccupied land for development.

[RantinRavin]

6. Please don't bring common sense and logic

into a "bash the rich" thread.

[slackmaster]

8. Absolutely none in my neighborhood

On DU there are always knee-jerk reactions to the effect that any economic news is either an indication of or an opportunity for the rich to get richer.

All of the recent sales in my area have been to people who plan to live in the homes.

[leftynyc]

7. That's not what I'm seeing

I work in Manhattan and live in Westchester Country (just north of NYC) and my receptionist was finally able to buy a home because prices fell - she's hardly rich. I'm seeing the same in Westchester. Prices coming down from their obscene highs and people that have been looking are starting to buy - these people wouldn't be considered rich by any stretch.