- The Washington Times - Thursday, March 24, 2005

From combined dispatches

New-home sales soared by 9.4 percent last month — the biggest increase since December 2000 — as buyers raced to beat rising mortgage rates, the Commerce Department said yesterday.

The over-the-month increase boosted sales of new houses to a seasonally adjusted annual rate of 1.2 million. Sales posted solid gains in all parts of the country in February. The pickup comes after sales dropped by 8.6 percent in January, when bad weather kept house hunters and prospective buyers indoors.

Home sales, which posted record highs last year, are expected to slow this year as mortgage rates move higher.

The Federal Reserve this week raised its overnight bank lending rate for a seventh straight time since June and said there were signs inflation is picking up, contributing to higher borrowing costs for consumers.

This week’s average 30-year fixed mortgage rate rose from 5.95 percent to 6.01 percent, the highest since the end of July, Freddie Mac said yesterday. The low was 5.21 percent in June 2003, according to the nation’s second-biggest buyer of mortgages.

“Thirty-year mortgage rates have been slow to rise, but they’re making up for it now,” said Paul Brewbaker, chief economist at the Bank of Hawaii. “That’s where this ‘last-chance-sale-ends-tomorrow’ mentality among buyers is coming from.”

Still, analysts think the housing market will remain in good shape.

The median price of a new house rose to a record high of $230,700 in February.

In a separate Commerce Department report, America’s factories saw orders for big-ticket goods rise by 0.3 percent in February after falling sharply the previous month. The report highlighted the sometimes uneven recovery experienced by manufacturers.

The increase in February pushed up the total value of new bookings for durable goods — costly manufactured products expected to last at least three years — to $200.8 billion.

The rise in orders came after a 1.1 percent drop in January, the Commerce Department reported yesterday.

Although most of January’s decline reflected weakness in demand for commercial airplanes, most of February’s pickup came from a big bounce in new orders for commercial aircraft and parts.

Demand for other types of manufactured goods last month was sluggish.

Excluding orders for transportation equipment, which can swing widely from month to month, durable-goods orders actually dipped 0.2 percent in February, the first decline since November.

In other economic news, the number of new people signing up for unemployment benefits last week rose by a seasonally adjusted 3,000 to 324,000 the Labor Department reported.

Even with the rise, claims are still at a level that suggests a gradual improvement in the jobs market.

In the manufacturing report, the 0.3 percent rise in overall orders for big-ticket goods in February was weaker than some analysts were expecting. They were forecasting a 0.8 percent increase.

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