New Home Sales Up 15% in April, But Market Dip Foreseen

Home sales and mortgage ratesExpiring tax incentives sparked a 14.8 percent surge in new, single-family home sales in April to a seasonally adjusted rate of 504,000 units, according to the U.S. Commerce Department.
It was the biggest boost in new home buying since May of 2008.
All other housing market measures have been confirming the upswing in sales as a result of the homebuyer tax credits that expired April 30.
But despite a more positive outlook from builders, most analysts see a slide in activity in coming weeks. Already, mortgage bankers have reported a significant slide in loan applications for the purchase of a home since the tax credit deadline.
“It stands to reason that this activity will level off over the next few months, as sales that would have occurred during that time were likely pulled forward to meet the April deadline,” said David Crowe, chief economist with the National Association of Home Builders. “That said, today’s favorable home buying conditions, the recovering job market and reviving consumer confidence should help take the place of tax incentives to generate buyer demand.”
Three out of four U.S. regions posted substantial gains in new home sales in April. The Midwest registered a 31.6 percent gain; the South, 10.8 percent; and the West, 21.7 percent. The Northeast posted no change in sales activity from the previous month.
The nationwide inventory of new homes on the market fell 5.8 percent to 212,000 units in April, the fewest since October of 1968. The supply of homes at the current sales pace declined to five months’ worth, the lowest since November of 2005.
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