Feb. new-home sales prove encouraging

WASHINGTON (AP) — It was the second-worst month on record for sales of new homes. But last month still brought a long-awaited shred of good news for the battered building industry.

February’s results, while still far below last year’s levels, provided some hope that new home sales have finally hit bottom, and the worst may be past. Prices, however, are likely to remain weak for months as builders continue to clear out their stock of unsold homes.

“We are prepared to hazard the view that the post-Lehman meltdown is now over and the market is stabilizing,” wrote Ian Shepherdson, chief U.S. economist at High Frequency Economics, referring to last fall’s collapse of investment bank Lehman Brothers and the subsequent Wall Street plunge. “That’s not the same as a recovery, but it is better than continued declines in sales.”

The Commerce Department said sales rose 4.7 percent in February to a seasonally adjusted annual rate of 337,000 from an upwardly revised January figure of 322,000. Even after the revision to January’s sales results, that month remained the worst on records dating back to 1963.

Economists surveyed by Thomson Reuters had expected February sales to fall to a pace of 300,000 units.

The report “is another faint but nonetheless encouraging sign that the economic slide may be moderating,” wrote David Resler, chief U.S. economist at Nomura Securities.

Since the report reflects signed contracts to buy new homes rather than completed sales, it could reflect the early impact of a new a new $8,000 tax credit for first-time buyers signed by President Barack Obama in mid-February.

Despite the boost, February’s sales were still down by more than 40 percent from the same month a year earlier. The median sales price fell to $209,000, a record 18 percent drop from the same month last year. The median price is the midpoint, where half sell for more and half for less.

And some analysts remain skeptical new-home sales are starting to recover, saying the data are notoriously volatile. They wouldn’t be surprised if sales fall back again, especially as the recession worsens.

Until job losses stop mounting, “I don’t think you’re going to see good housing numbers,” said Patrick Newport, an economist at IHS Global Insight.

The nation’s unemployment rate — now at a quarter-century peak of 8.1 percent — is expected to keep climbing. Some economists think it will hit 10 percent by the end of this year.

Fallout from the housing crisis has played a central role in the U.S. recession, now in its second year. Foreclosures have spiked, financial companies have racked up multibillion-dollar losses and home builders like Pulte Homes Inc., D.R. Horton Inc. and Lennar Corp. have been clobbered.