With home sales booming and recent price increases in petroleum products and building materials, the stage is set for the Federal Reserve Board to raise interest rates, which could put a damper on housing demand.
Sales of new homes surged nationally by 8.9% in March, according to the U.S. Commerce Department, pushing the single-family homes pace to a record seasonally adjusted annual rate of 1.228 million. The housing industry usually sets the trend for the entire economy. If spring sales continue to set records, look for the Fed to apply the brakes.
The big winner regionally was the South, posting a 19.3% sales gain in March, compared with 5.1% in the West and 5% in the Midwest. Sales nose-dived 24.3% in the East.