New home sales jumped up in March at the fastest single-month rate since March 1963. The government report released on Friday said buyers gobbled up new houses ahead of the federal tax credit that is just about to expire.
New-home sales rose 26.9% to a seasonally adjusted annual rate of 411,000 in March, compared to a revised annual rate of 324,000 in February.
The surprise jump was significantly better than even the most optimistic professional forecasters had thought. The average economist surveyed said that March sales gains would only amount to an annual rate of 330,000.
The rate gain was the biggest in a month-over-month measure since a 31% gain 47 years ago in March 1963.
Gains in the South were especially pronounced. New home sales there were up 43.5%. The Northeast region also saw a massive 35.7% spike.
"It's obvious that home buyers are rushing in to take advantage of the tax credit that's set to expire," said Robert Dye, an economist for PNC Financial Services.
In a national housing market that still is concerned about oversupply, the March results also produced significantly declining market inventory. The report showed that at the current rate inventory is now at 6.7 months. That is down sharply from over 9 months of inventory in February.
"It's a very good sign to see [the inventory] number down," said Dye. "Firming house prices and an improving jobs market will make recovery felt on Main Street as well as Wall Street," said Dye. "We're headed in the right direction."