Home sales on the rise

April 24, 2010 at 12:00a.m.

Associated Press

WASHINGTON

Sales of new homes took the biggest monthly jump in 47 years in March, while orders for most large manufactured products rose by the largest amount since the recession started.

The two reports were a sign that the recovery is picking up speed, and some economists are raising their estimates for U.S. economic growth this year.

“The recovery has been proceeding at a more rapid pace than we thought,” said Zach Pandl, economist with Nomura Securities in New York.

Factories are benefiting from a sharp increase in orders from U.S. and foreign businesses. But the housing market’s fuel is coming from a less-sustainable source: government subsidies. Some analysts predict demand for homes will fall again over the summer, preventing the beleaguered sector from adding much to the economic recovery.

The government is offering an $8,000 tax credit for first-time buyers and $6,500 for current homeowners who buy and move into another property. To qualify, buyers must have a signed contract complete by the end of next week and need to finish their transaction by the end of June.

Home builders are aggressively promoting countdowns to April 30 or “last chance” sales.

Nishu Sood, an analyst at Deutsche Bank, said after the credits are gone, “the most likely scenario is that, starting in May, sales will fall off again.”