(Updates markets, share prices)
* New home sales drop 14.5 percent in March
* New housing stock up 3.2 percent, median price at record
* Factories expand in April, new orders push higher
* Housing stocks tumble
By Lucia Mutikani
WASHINGTON, April 23 Sales of new U.S.
single-family homes tumbled to their lowest level in eight
months in March, dashing hopes for a quick turnaround for a
sector that fell into a soft patch last summer.
The Commerce Department said on Wednesday sales dropped 14.5
percent to a seasonally adjusted annual rate of 384,000 units.
It was the second consecutive monthly decline and the biggest
since July, which was also the last time sales were so slow.
Sales were down 13.3 percent from a year ago, marking the
largest year-on-year decline since April 2011.
Economists, who had expected sales to increase, said the
drop suggested some fundamental weakness in the market, although
unusually cold weather had also dampened activity.
"The weak tone of this report is a bitter pill for those,
including ourselves, who have been looking for signs of a spring
thaw in the housing recovery," said Millan Mulraine, deputy
chief economist at TD Securities in New York.
U.S. housing stocks took a beating on the dour report, with
the S&P 500 Homebuilding Index ending down about
1.1 percent. An index of smaller builders closed
about 4.0 percent lower.
Luxury home builder Toll Brothers fell 1.8 percent
and DR Horton, the largest U.S. homebuilder, dropped 2.4
percent. The broad U.S. stock market ended marginally lower
after six sessions of gains.
The housing market was slammed by the unusually cold and
snowy winter, but higher mortgage rates, a run-up in prices and
a shortage of properties that limited options for buyers have
also cut into activity.
New home sales last month dived in the Midwest and the
South, where unusually cold weather lingered early in the month.
They also fell in the West. While sales in the Northeast rose,
they failed to recoup even half of the prior month's
"The rise in interest rates and prices of new homes is
leaving some potential buyers with sticker shock," said Bill
Banfield, vice president at mortgage lender Quicken Loans in
Data on Tuesday showing a mild decline in home resales in
March had offered hope the housing market was stabilizing.
But the new home sales data and another report on Wednesday
showing a drop in mortgage applications both suggested it would
probably be a while before housing found its footing.
The sector's weakness could help convince the Federal
Reserve to keep benchmark interest rates near zero long after it
ends a bond-buying stimulus program later this year.
Even so, it is unlikely to derail the economy given that
other sectors, such as manufacturing, are regaining momentum.
Financial data firm Markit said its preliminary
manufacturing purchasing managers index was little changed in
April. The survey's measure of output, however, hit its highest
level since March 2011, with new orders increasing.
"This improvement is broadly consistent with our view that
manufacturing production is going to pick up in the second
quarter following a soft first quarter," said Daniel Silver, an
economist at JPMorgan in New York.
Though new home sales are volatile month-on-month and
account for less than 10 percent of the overall market, the drop
in March confirmed that housing would again be a drag on gross
domestic product in the first quarter. In the fourth quarter, it
subtracted from GDP for the first time in three years.
Last month, the inventory of new houses on the market
increased 3.2 percent to the highest level since November 2010.
While the stock is up from a record low hit in July 2012, it
is not even halfway back to its pre-recession level.
March's weak sales pace pushed the months' supply of houses
on the market to 6.0, the highest level since October 2011, from
5.0 months in February.
Nevertheless, the median price of a new home last month rose
12.6 percent from March last year to a record $290,000, a
reflection of the still-lean inventories.
(Reporting by Lucia Mutikani; Additional reporting by Rodrigo
Campos in New York; Editing by Tim Ahmann and Paul Simao)