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New-home sales rise 7.3% in April

It's the second solid monthly gain since a steep drop in February. All four regions saw increases, led by a 15.1% gain in the West.

May 24, 2011|By Greg Robb

Washington — U.S. sales of new homes posted their second solid monthly gain in April after hitting extremely low levels in February, according to data released Tuesday by the Commerce Department.

In April, sales rose 7.3% to a seasonally adjusted annual rate of 323,000 after an 8.3% increase in March, the Commerce Department reported.

The increase surprised economists, who had forecast a slight decline to 295,000, according to a MarketWatch survey.

Sales gains took place in all four regions. Sales rose 15.1% in the West, 7.7% in the Northeast, 4.9% in the Midwest and 4.3% in the South.

Those gains followed February's steep drop to a 278,000-unit pace. Analysts had attributed that weakness in part to winter storms that depressed figures in the East and the Midwest as well as a California tax credit that has expired.

Economists were cautious about reading too much into the increase in April new-home sales, as the level of sales remains very depressed and not too far above record lows.

"Is it a rebound that is for real? At least it's a start toward one," said Robert Brusca, chief economist at FAO Economics.

Compared with April 2010, last month's sales were down 23.1%.

On a three-month moving average — which reduces the month-to-month variance in the hugely volatile release — sales rose to a 300,000 rate from 296,000.

Economists at Barclays Capital noted that new-home sales have ranged from 275,000 to 310,000 since May 2010, when the effects of the federal tax break for home buyers began to wane.

By comparison, monthly new-home sales averaged a 1.05 million pace in 2006, just when the housing bubble was beginning to collapse.

In April, the number of unsold new homes on the market slipped 2.8% to a record-low 175,000. That represented a 6.5-month supply at the April sales pace, the leanest inventory since April 2010. This is down from a peak of 12.2 months in January 2009.

Robb writes for MarketWatch.com/McClatchy.

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