The U.S. housing market awakened from its doldrums in April, with the sales of newly built homes surging 6.8 percent and surpassing most expectations.
The Commerce Department said on Tuesday that new home sales shot up to a seasonally adjusted annual rate of 517,000 units. March’s sales pace was revised up to 484,000 units from the previously reported 481,000 units. Economists generally had forecast new home sales, which represent about one-tenth of the market, rising to a 510,000-unit pace in April.
The report marked a rebound in housing, which has been mostly lackluster through the 2014-2015 fall and winter months, and early spring. Housing data has been mixed despite low mortgage rates and steady jobs growth. Existing-home sales — which make up the core of the market—declined 3.3 percent last month, the National Association of Realtors said Thursday, as the median sale price for a previously owned home was up 8.9 percent from a year earlier.
With supplies still tight, the median price for a new home rose 8.3 percent from a year ago to $297,300, the Commerce Department said Tuesday. While higher home prices could reduce affordability, they boost household equity, which could boost consumer spending — the cornerstone of an economic recovery.
New homes sales jumped 36.8 percent in the Midwest to a seven-year high and increased 5.8 percent in the South. Sales fell 5.6 percent in the Northeast and slipped 2.3 percent in the West.
Supplies of new houses available on the market rose 0.5 percent last month to 205,000. However, supply still remains less than half of what it was at the height of the housing boom. This is actually positive news for home builders who will need to ramp up construction.
At April’s sales pace, it would take 4.8 months to clear the supply of houses on the market, down from 5.1 months in March.