Sales of New Homes Rose Unexpected 4.9% in April
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Thursday, May 25, 2006
Sales of new homes rose unexpectedly in April to the fastest pace this year as the housing sector showed resilience in the face of rising mortgage rates. The price of homes sold last month edged up only slightly, however, and the level of unsold homes rose to a record high.
The Commerce Department reported that sales of new single-family houses increased by 4.9 percent last month to a seasonally adjusted annual rate of 1.2 million units, the highest rate since last December.
The pace of activity caught economists by surprise. They had been expecting a decline in sales, reflecting the fact that mortgage rates have been climbing in recent weeks and now stand at the highest level in nearly four years.
The unexpected jump in April home sales was not likely to change the overall view that the booming housing industry is beginning to cool off after setting sales records for five straight years.
The median price of a new home sold in April rose to $238,500, a gain of 2.8 percent from the March level but up 0.9 percent from the median sales price in April 2005, far below the double-digit year-to-year price gains that sellers had been enjoying during the recent sales boom.
The backlog of unsold homes rose by 2.4 percent to a record of 565,000 homes at the end of April. At the April sales pace, it would take 5.8 months to deplete that backlog.
Economists believe the slowdown in housing will be gradual as long as inflation pressures remain moderate enough to allow the Federal Reserve to soon pause in its two-year campaign to push interest rates higher. Last week, rates on 30-year fixed mortgages were 6.6 percent, the highest level in almost four years, Freddie Mac said.
