* In line with expectations, new home sales (-2.2% to 308,000) were more stable in February along with existing home sales after the
run up last year ahead of the initially scheduled expiration of the homebuyers' tax credit and subsequent payback. Sales have now
dropped 23% the past four months after rising 22% from January through October. With the tax credit having been extended and
expanded, adding to already historically high housing affordability resulting from depressed home prices and near record low mortgage
rates, and the labor market improving, sales will likely resume moving higher in the months ahead moving into the key spring selling
season. Mortgage applications for new purchases are up 7% so far in March over February, suggesting that sales are improving this
month. Homebuilders are having trouble competing with prices on distressed sales, however, so upside in sales will likely be led by
existing homes and the recovery in homebuilding will probably continue to be very sluggish.
New Home Sales _February_
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