New-Home Sales Rise

New-home sales rose 2.6% in March after falling 16% since December as homebuilders continued to struggle with large inventories of unsold homes.The U.S. Census Bureau reported that new single-family home sales rose from 836,000 in February to 858,000 in March. The sales pace is off by 23.5% since March 2006. Economists at the National Association of Home Builders were relieved to see an improvement in March, but sales are still slow and they said they don't expect to see a bottom until the end of the second quarter. Meanwhile, the increased sales did not put a dent in inventories. And NAHB senior economist Bernard Markstein said builders are still dealing with high cancellations due to a pullback in subprime lending. When many homebuyers signed a sales contract one or two months ago, they thought they were pre-qualified for a mortgage, Mr. Markstein said. "Now they are being told they can't handle the mortgage, and they cancel." Meanwhile, the Census Bureau still counts it as a sale even though the house is ready to be sold again.