Nation’s new home sales climb to seven-year high

Purchases of new homes unexpectedly rose in February to a seven-year high as stronger job gains helped bolster industry activity amid severe weather.

Sales climbed 7.8 percent to a 539,000 annualized pace, the most since February 2008, Commerce Department data showed Tuesday in Washington. The reading exceeded even the most optimistic forecast of economists surveyed by Bloomberg.

Americans withstood weaker income gains and higher property prices, braving a chillier-than-usual February to go out and buy a house last month. Further healing in the labor market and a boost in inventory should provide stronger support to an industry entering its busiest sales season.

'You have solid job growth, income growth is a little bit soft but still positive, still very low mortgage rates, gradually easing access to credit,” Gus Faucher, senior economist at PNC Financial Services Group in Pittsburgh, said before the report. 'I would expect we'd see further gains over the course of this year.”

The median forecast of 76 economists surveyed by Bloomberg called for the pace to fall to 464,000. Estimates ranged from 400,000 to 490,000. The Commerce Department revised the January reading up to a 500,000 pace from a previously estimated 481,000.

The figures are based on a small sampling of builders that makes them subject to revisions. The report showed the confidence interval for last month's reading was plus or minus 15.2 percent. That means there was a 90 percent chance the change in sales in February was between a decline of 7.4 percent and a 23 percent advance.

The median sales price of a new house increased 2.6 percent from February 2014 to $275,500, Tuesday's report showed.

The strengthening in demand last month was led by a record 153 percent surge in the Northeast and a 10.1 percent gain in the South. Purchases fell in the Midwest and West.