WASHINGTON – Sales of new U.S. homes soared 9.4 percent in February, the largest jump in more than four years and well above Wall Street forecasts, as sales rose nationwide, a government report showed on Thursday.
Economists had expected sales to climb more modestly to a 1.150 million unit rate from the 1.106 million pace originally reported for January. The increase was the largest since December 2000 and took the sales pace back to its December 2004 level.
Sales rose in all four regions of the country. They shot up 20.3 percent in the Northeast, 9.9 percent in the Midwest and 7.4 percent in the West. In the South, which boasts the lion's share of housing activity, sales climbed 9 percent to a record pace of 619,000.
Many economists expect home sales, which have helped underpin the U.S. economic expansion, to cool as the Federal Reserve (search) continues to push interest rates higher to head off inflation.
On Tuesday, the Fed raised the benchmark federal funds rate by a quarter-percentage point for the seventh straight time, taking it to 2.75 percent.
However, long-term rates set by the markets, including fixed mortgage rates, have been slow to respond and the home sales report showed activity remains at high levels.
At February's sales pace, the supply of new homes on the market stood at 4.4 months' worth, a decline from January's 4.6 months' supply.
The median sales price of new houses in February rose to a record $230,700 from $210,400 in January.
In a report on Wednesday, the National Association of Realtors said sales of existing U.S. homes dipped 0.4 percent last month, to a still-healthy 5.94 million unit rate, a further sign rising interest rates have yet to have much bite.
However, that may be shifting. The Mortgage Bankers Association (search) said on Wednesday applications for mortgages dropped last week due to the rising cost of loans. Rates on fixed 30-year loans hit an average 5.95 percent last week, the highest level since August.