WASHINGTON – A jump in demand for Boeing Co. commercial aircraft pushed orders for big-ticket manufactured goods higher in March while sales of new homes shot up at the fastest pace in 13 years, reflecting a rebound from bad weather in February.
Both reports depicted an economy continuing to expand at a healthy pace, a view supported by a new survey of business conditions around the country released Wednesday by the Federal Reserve.
The Fed’s 12 regional banks used words such as “solid” and “steady” to describe the economy’s performance in March and early April. The Fed did note that “higher energy prices were at the forefront of most districts’ mention of cost pressures,” and that was before crude oil soared to a new record of $75.17 per barrel Friday.
Some analysts said the strong growth plus rising inflation pressures will mean the central bank’s rate-setting Federal Open Market Committee will not only raise rates for a 16th time at its next meeting in May but will keep going after that.
“The U.S. economy is firing on all cylinders right now and there is little to no slack left,” said Sherry Cooper, chief economist at Harris Bank in Chicago. “This makes it increasingly unlikely that the Fed will pause after the May 10 FOMC meeting.”
The Commerce Department reported that sales of new single-family homes rose 13.8 percent last month to a seasonally adjusted annual sales rate of 1.213 million units. The increase represented a recovery from a 10.9 percent plunge in sales in February.
But the median price of homes sold in March dropped to $224,200, down 2.2 percent from what homes were selling for in March 2005. It marked the first time home prices dropped over a 12-month period since December 2003.
Home prices last year were soaring as buyers bid more to get into a sizzling home market. However, analysts believe that sales, which set records for five straight years, will decline this year by around 10 percent under the impact of rising mortgage rates.
Home sales were up in all areas of the country in March, led by a 35.7 percent surge in the West, followed by gains of 10.9 percent in the Midwest, 6.9 percent in the South and 4.7 percent in the Northeast.
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