Purchases of new homes surged in March to an annualized rate of 411,000, an increase of 27% over February, according to the U.S. Census Bureau. That's the fastest growth of new home sales since April 1963. While selling additional new home is an indication that consumers are feeling more bullish about the housing market, today's news should be taken in context.
This news isn't particularly shocking for those who follow the housing market, considering that pending home sales increased significantly in February. New home sales rising also complements yesterday's news that the sales of existing homes increased in March. The home buyer credit, set to expire in April, was described as mostly responsible for that news. There's little doubt that the credit also drove new home sales to increase so much last month.
It is a little shocking that home buyers aren't more interested in looking for deals on foreclosures or short sales, however. Foreclosures hit a new high in March, so there are plenty of steals be had for bargain hunters. Yet, many Americans chose to buy new homes instead.
March's 411,000 annualized home sales were quite good compared to the prior month's 324,000. But after a four-month decline, February had the fewest new home sales on record -- since at least January 1963. So even relatively few sales in March would have had trouble falling below February's level. In fact, the historical numbers show how weak March's new home sales actually were: