New Home Sales Bounce Back in March

Recent government data showed that sales of new homes rose by 26.9% in March, breaking a four-month slump that was the result of both the sagging economy and the brutal snowstorms that blanketed much of the country.

According to the data, 411,000 new homes were purchased in the month of March, up from February’s dismal figure of 324,000 homes — the lowest number since the government tracked such statistics in 1963. Despite the good news, economists say there is nothing to cheer about: the March numbers pale in comparison to figures in years past. They say the numbers give a false impression that the housing market boom has returned.

This recent surge in new home sales can be attributed to homebuyers making a last-minute rush for the federal tax credit and the steadily improving economy. Buoyed by this good news, the Standard & Poor’s Index of 12 major home builders went up 11%. Today’s report from the Labor Department showed that initial applications for jobless benefits dropped to 448,000 — the lowest level in four weeks. More good news for prospective homebuyers: interest rates on a 30-year fixed-rate mortgage fell from 5.07% last week to 5.06% this week, according to a recent Freddie Mac survey.

Whether the housing market will stay on a roll depends on how well the economy performs in the coming months. Plus, with the homebuyer tax credit expiring tomorrow, the question remains if it will still remain a buyer’s market.