WASHINGTON -- Sales of previously owned homes remained strong in March while imports and exports both posted records in revised February trade statistics, offering little evidence of a slowdown in the U.S. economy.
Home resales fell a smaller-than-expected 2.8 percent last month to an annual rate that's still close to record levels, after rising a revised 8.2 percent in February, according to an industry report yesterday.
Separately, corrected government figures confirmed that the trade deficit in goods and services narrowed to $10.419 billion in February as a 4 percent rise in exports outpaced a 1.1 percent increase in imports. Exports set a record of $73.5 billion for the month as imports reached a record $83.8 billion.
"The economy is on a roll," said William Sullivan, chief economist at Dean Witter Reynolds in New York. "Final demand is strong, whether it's for imported goods or homes."
Consumer spending propelled the economy forward in last year's final quarter and this year's first quarter. The housing report suggests that the Federal Reserve's quarter-point rise in the overnight bank lending rate last month may not be enough to cool demand to a pace that will keep inflation contained.
Yesterday, J. Alfred Broaddus, president of the Federal Reserve Bank of Richmond, Va., said the Fed must remain on guard -- even though there is no concrete evidence of rising prices.
"The time to resist inflation is precisely when there is no inflation," said Broaddus, a voting member of the Fed's policy panel, the Federal Open Market Committee.
Analysts were expecting March home resales to fall 3.2 percent. The smaller decline translated into an annual rate of 4.11 million sales, close to February's rate of 4.23 million and the record rate of 4.28 million in May 1996, figures from the National Association of Realtors show.
That strength in the housing market has persisted even though U.S. mortgage rates bottomed out most recently in December and have been mostly rising since. After falling to 7.44 percent before Christmas, the average rate on a 30-year fixed mortgage rose as high as 8.18 percent early in April and has been stuck above 8 percent since then.
The realty group, which reports monthly on home resales, blamed the March decline in sales on harsh weather and higher borrowing costs. The group said housing activity is returning to a more sustainable pace after posting unusually strong gains early in the year.
"Mild temperatures did draw a lot of folks to buy early in the year," said Russell Booth, NAR's president. "The activity we are seeing now is beginning to reflect the impact of bad weather, including massive flooding in the Midwest and West."
Pub Date: 4/26/97