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New home sales posted their biggest monthly increase in half a century in March, bouncing back from an all-time low in February with a whopping 27 percent increase.

One big word of caution, though – much of it could all be due to sampling error in the survey.   Monthly figures released today by the Commerce Department reported that sales of newly-built, single-family homes rose to a seasonally adjusted annual rate of 411,000 units in March, up from an upwardly revised rate of 324,000 in February. Even with the revision, February’s rate was an all-time low for the survey.   Analysts attribute the increase in March sales to an early spring that helped bring out home shoppers and the pending expiration of the home buyer’s tax credit at the end of April. Even so, the increase far exceeded the expectations of economists, who were predicting only a slight gain.   All of which brings up the question of the accuracy of the survey. The Commerce Department survey contains a high sampling error, that is, the survey results may differ significantly from the actual sales that occurred. The Department cautions that it takes four months of data to reliably establish trends in new home sales.   Large swings in Commerce Department housing data in the past, either gains or declines, frequently turn out to be blips in the data, with figures in subsequent months canceling out much of the increase or gain. However, the blips often do indicate the direction of new trends and the current month’s increase is large enough to indicate that a substantial increase has taken place.   If it holds up, the current monthly rate of 411,000 units would be the highest since last July, whose 419,000 units represented the peak of new home sales in 2009.   The median sales price declined, to $214,000, down from $221,600 in February.   On a national basis, sales activity was up strongly in the Northeast and South, with the Midwest and West posting moderate increases. Overall, the time it took for a new home to sell remained unchanged, with the average new home on the market for 14.4 months before selling.

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