NEW YORK (CNNMoney.com) -- New home sales improved in March at the fastest single-month rate in 47 years, according to a government report released Friday, as buyers snatched up properties ahead of the tax credit that's set to expire.
New-home sales rose 26.9% to a seasonally adjusted annual rate of 411,000 last month, compared to an upwardly revised annual rate of 324,000 in February, the Census Bureau said. The gain snapped a four-month streak of declines.
A consensus of economists surveyed by Briefing.com expected March sales to rise to an annual rate of 330,000.
The March sales were the strongest since last July, and the percentage gain was the biggest on a month-over-month basis since a 31% gain in March 1963.
New-home sales spiked in every region of the United States. The South saw the biggest jump in new home sales, up 43.5%, while the Northeast region saw sales climb 35.7%. The West and Midwest regions both saw single-digit percentage growth, with the West up 6% and the Midwest up 4%.
The Census Bureau data followed a report from the National Association of Realtors on Thursday that showed existing home sales soared nearly 7% in March, as new homebuyers raced to buy up properties before a tax credit expires on April 30.
"It's obvious that homebuyers are rushing in to take advantage of the tax credit that's set to expire," said Robert Dye, senior economist for PNC Financial Services.
In November, the government extended and expanded an $8,000 tax credit, which also allows some repeat buyers to qualify for a $6,500 credit. Buyers have until April 30 to qualify.
Fewer homes to buy
Dye expects to see continued strength in April's data before "tailing off" through the summer as the group of buyers who rushed in are "all spent out."
The Census Bureau estimated that 228,000 new homes hit the market in March. At the current sales rate, it would take 6.7 months to sell through that inventory, down sharply from an estimated 9.2 months of inventory in February.
Although new-home sales in March exceeded analyst expectations, sales are still trending near record lows, and prices are still under pressure due to oversupply.
"It's a very good sign to see [the March inventory] number down," said Dye. "But this needs to tighten up more to see upward pressure on prices."
The average price of a new home was $258,600, according to the Census Bureau. That was virtually flat compared to a year earlier, and 12% below average prices in 2008.
A precarious jobs market continues to threaten the housing market. Dye expects the April unemployment rate to dip to a still-high 9.6% from March's 9.7% when data are announced May 7.
"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."
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