Purchases of new U.S. homes slumped more than forecast in March from a seven-year high, a sign progress in the industry will be halting.
Sales dropped 11.4 percent to a four-month low 481,000 annualized pace, Commerce Department figures showed Thursday in Washington. The median estimate of 79 economists surveyed by Bloomberg called for a 515,000 rate.
Support for the housing market coming from better job growth and low mortgage rates is being countered by a limited supply of available homes and still-tight lending standards, creating a situation where improvement in the industry may be fitful in the months ahead. Stronger income growth for American households will be needed to further buttress the market.
“There are opposing forces there for housing demand, but on net the trend looks pretty favorable,” said Michael Feroli, chief U.S. economist at JP Morgan Securities LLC in New York, who is among the top forecasters of new-home sales over the past two years, according to data compiled by Bloomberg. “Mortgage rates help, job growth is pretty solid and those are the positives.”
Stocks fluctuated, with equities trading near records, as Procter & Gamble Co. and 3M Co. slumped as the stronger dollar took a toll on sales while Caterpillar Inc. and EBay Inc. rallied on earnings outlooks. The Standard & Poor’s 500 Index fell 0.2 percent to 2,104.58 at 10:22 a.m. in New York. The S&P Supercomposite Homebuilding index declined 3.6 percent.
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