New home sales fell in April to their lowest level since the nation's economy emerged from the 1981-82 recession, the government said this week.
Analysts attributed the fifth consecutive monthly decline to continued double-digit mortgage rates.
The Commerce Department reported that new home sales totaled a seasonally adjusted annual rate of 546,000 units in April, the smallest number since 521,000 units were sold in December 1982.
"We're seeing the worst of it right now," said economist Mark M. Zandi of Regional Financial Associates in West Chester, Pa. "In April and early May, mortgage rates were at their highest levels and have come back down since then."
According to national surveys by the Federal Home Loan Mortgage Corp. (Freddie Mac), recent mortgage rates peaked at 10.67 percent during the first week in May and had fallen to 10.33 percent by May 25.
The rates ranged between 10.25 percent and 10.56 percent in April.
Thomas Holloway, an economist with the Mortgage Bankers Association of America, said the recent decline may help sales in the near-term but that rates would move in the range of 10.25 percent to 10.5 percent for the rest of the year.
On the other hand, John A. Tuccillo, chief economist with the National Association of Realtors, said, "We expect mortgage rates to trend downward in the summer, which should spur sales of new homes and existing homes."
Tuccillo said rates also have cut into sales of existing homes, which also slipped in April, down 2.1 percent. It was their third drop in four months, although sales were unchanged in March.
David Seiders, chief economist with the National Association of Home Builders, said that in addition to high rates, the general economic sluggishness is having an adverse affect on sales.
"Income growth and employment growth are clearly weak," he said.
As a result of the weak sales, inventories of new homes rose to their highest level since July 1982 -- an 8.1-month backlog at the April sales pace, compared with 8.2 months during the last recession.
Both median and average prices for new homes set records in April, but analysts generally agreed that reflected sales gains in the expensive Northeastern market -- the only region posting increased purchases.
The median price jumped 13.8 percent, to $135,900, while the average price increased 11.2 percent, to $160,200. The median price means half of the homes cost more, half less.
New home sales in the Northeast rose 18 percent, to 105,000 units, after a 34.8 percent gain in March.
Few economists believe the pace can be sustained, however.
"There's no reason for a rebound in the Northeast," Seiders said. "Interest rates are the same everywhere and employment is weak there. I don't expect any continuation of the percentage increases we saw in March and April."
Sales were down 6.4 percent in the West, to 146,000 units; down 6 percent in the South, to 203,000 units; and down 2.1 percent in the Midwest, to 92,000 units.
For the first four months of 1990, sales have fallen 6.8 percent, to 206,000 units.