New-Home Sales Rise
Original Post Date: May 24, 2011
By: Jeff Bater and Jeffrey Sparshott
New-home sales rose more than expected and the median price climbed in April, but the overall pace of sales remained weak for the battered U.S. sector.
Sales increased by 7.3% on a monthly basis to a seasonally adjusted annual rate of 323,000 in April, the Commerce Department said Tuesday.
Economists surveyed by Dow Jones Newswires had forecast sales would remain unchanged at an annual rate of 300,000.
Despite the unexpected increase, sales since a year ago are down sharply, having fallen 23.1% since April 2010, which is when a tax subsidy for first-time home buyers ended.
Sales rose 8.3% in March, revised down from a previously estimated 11.1% increase. The March jump followed a February plunge that was blamed on the weather as well as fundamental troubles in the housing sector.
Uncertainty over property prices has made homebuyers hesitant to purchase new houses. Lower selling prices weighed down PulteGroup Inc. in its first quarter, with the builder’s revenues tumbling by 21%.
Home construction in April fell sharply, the government reported last week. Builders face competition from previously owned homes, which cost less. A wave of foreclosures caused by the housing bust and the deep recession swamped the market with cheap property.
The median price for an existing home in the U.S. is $163,700, the latest data show. The median price for a new home, on the other hand, was $217,900 in April, Tuesday’s report said. A year earlier, the median price for a new home was $208,300. The increase was encouraging because prices have been sinking for a long time, making consumers reluctant to buy because of a belief prices might recede further.
Unsold homes on the market have kept down prices. Tuesday’s data showed April inventories were at a record low. But the time it would take to exhaust the supply of unsold homes on the market was 6.5 months in April, above the baseline of six months that economists consider healthy. The supply in March was 7.2 months and it had been much higher just last summer, hitting nine months.
The Commerce report said new-home sales in April rose in all four U.S. regions on a monthly basis. Sales increased by 7.7% in the Northeast, 15.1% in the West, 4.9% in the Midwest, and 4.3% in the South.