WASHINGTON - Sales of new single-family homes in the United States increased during March at the fastest pace in one and a half years as buyer optimism about the economy fueled purchases, government figures showed. Sales unexpectedly rose 4.5% in March to a seasonally adjusted annual rate of 966,000 units, after a February decline of 0.6%, the Commerce Department said Tuesday.
The March' sales rate was the strongest since a 995,000-unit pace in November 1998.
Homes have sold at an average rate of 940,000 units in the first three months of this year, the best quarter since the fourth quarter 1998.
The statistics suggest "that the economy is not likely to slow without considerable further restraint, either through higher rates or a lower stock market," said Christopher Low, chief economist at First Tennessee Capital Markets in New York.
A separate report showed the index of leading economic indicators, a gauge of economic performance over the next six months, rose 0.1% in March after a 0.3% drop in February.
Unemployment near a 30-year low and a Nasdaq composite index that more than doubled in value from a year earlier during March gave the housing market a boost, analysts said.
Analysts had expected sales to decline 2.1% to an annual rate of 900,000 in March after a previously reported decline of 0.5% in February.
Bond yields rose on the report, and the Dow Jones industrial average fell, on investor concerns that the Federal Reserve will raise interest rates by as much as a half-percentage point on May 16 to slow the economy.
Sales increased 12.9% in the West, to a seasonally adjusted annual rate of 272,000; 11.5% in the Northeast, to an 87,000 rate; and 5.1% in the Midwest, to a 185,000 rate. Sales fell 1.9% in the South, to a 421,000-unit rate.
The inventory of available homes was unchanged, at 4.1 months. The number of homes available for sale rose to 322,000, from 310,000 in February.
The median price of a new home rose to $165,000, from $160,000 a month earlier.
Higher home prices lifted first-quarter profits 1.3% at Pulte Corp., one of the largest U.S. homebuilders. The Bloomfield Hills, Mich., company said last week that revenue from domestic home sales rose 10% as the average price of a home sold rose $18,000 over the same quarter a year earlier.
Rising income and abundant jobs have buoyed the real-estate market, outweighing the impact of five increases in the overnight bank lending rate by the Fed since June of last year.
Low unemployment helped provide incomes for consumers to buy homes.
Sales of previously owned homes rose 1.5% in March, to an annual rate of 4.83 million, the National Association of Realtors reported April 25. It was the fastest pace this year.
Sales in 1999 were a record 5.2 million units.
What's more, some borrowing costs are beginning to ease. The average rate on a 30-year fixed-rate mortgage slipped to 8.13% last week, after peaking at 8.38% in February, according to numbers from Freddie Mac, the No. 2 buyer of U.S. mortgages.