Wednesday, May 28, 2008
Sales of new homes rose in April for the first time in six months, though the unexpected increase still left activity near the lowest level in 17 years.
A separate report showed home prices falling in the first three months of the year at the sharpest rate in two decades. The Standard & Poor's/Case-Shiller index fell 14.1 percent in the first quarter compared with a year earlier, the biggest year-over-year decline since the index began in 1988.
The Commerce Department reported that sales of new homes rose 3.3 percent in April, to a seasonally adjusted annual rate of 526,000 units. But that increase was compared with March, for which the government revised its sales estimate down to the weakest pace since April 1991.
The Commerce report showed that the median price of new homes sold in April was $246,100, up 1.5 percent from April 2007.
The inventory of unsold new homes edged down, to 10.6 months' supply at the April sales pace, compared with 11.1 months in March. However, the April level was still about double the normal inventory levels during the five-year housing boom.
Economists said new-home sales will remain weak as the housing industry struggles with falling prices and rising mortgage foreclosures, which are dumping even more homes on an already glutted market.
The drop in home prices as measured by the widely followed Case-Shiller index was an indication that the housing slump has continued to deepen.
"There are very few silver linings that one can see in the data. Most of the nation appears to remain on a downward path," said David Blitzer, chairman of S&P's index commitstee.
Prices nationwide are at levels not seen since the third quarter of 2004, according to Maureen Maitland, a S&P vice president. However, the index is still up 60 percent compared with 2000.
Two narrower S&P indexes set record declines in March compared with the previous year. The 20-city home-price index tumbled 14.4 percent. The 10-city index plunged 15.3 percent, a record in its 20-year history.
Nineteen of the 20 metropolitan areas reported annual declines, with 15 of them posting record lows. Six metro areas lost more than 20 percent.
Las Vegas had the worst performance in March, falling 25.9 percent from a year earlier, followed by Miami and Phoenix. Only Charlotte stayed above water, gaining less than 1 percent over the previous year. Prices in the Washington area fell 14.1 percent.
Last week, the Office of Federal Housing Enterprise Oversight said home prices fell 3.1 percent in the first quarter, the largest drop in the agency's 17-year history and only the second quarter of price declines recorded.
The OFHEO and S&P indexes are based on different groups of transactions. OFHEO's index is calculated using mortgages of $417,000 or less that are bought or backed by Fannie Mae or Freddie Mac. That excludes properties bought with some of the riskier types of home loans. However, it has broader geographic coverage than the private-sector index.