New-home sales surge to record high

Sales of new homes unexpectedly surged 12 percent in March to a new record, defying predictions of economists who long have expected the red-hot market to show signs of cooling.

"This housing market is so hot that hot is not a correct term for it," said Joel Naroff of Naroff Economic Advisers.

"We are talking about levels that simply are unimaginable," he said in a note. "How many first, second, third and fourth homes can people afford?"

Even David Seiders, chief economist for the National Association of Home Builders, said he was at a loss to explain the sales surge, which came on top of upwardly revised figures for January and February. He and other analysts had expected sales to decline in March.

He said the trade group's surveys of builders had failed to pick up any signs of a surge in demand.

"Unbelievable — it's hard to sort out," Seiders said in an interview. "The first quarter is so easily a record it's not even funny."

Although many analysts expect sales to slow in the second half of the year, assuming that long-term interest rates rise from still-low levels, new and existing home sales combined are on a pace to top 8 million units this year, which would be a fifth straight record year.

Last month sales of new, single-family homes rose to a seasonally adjusted annual rate of 1.43 million units, up 12.2 percent from 1.275 million in February. It was the biggest one-month jump since September 1993.

The news came on top of Monday's report from the National Association of Realtors that sales of existing homes rose a surprising 1 percent last month to the third-highest pace on record. The median price for existing homes jumped 11 percent from year-earlier levels to $195,000 — the biggest jump in 25 years.

By contrast the median price for new homes, $212,300, was up only 1.3 percent from year-ago levels and down 6 percent from February.

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