Sales of new homes climb more than forecast

Posted on May 24th, by Administrator in News. No Comments

WASHINGTON – Demand for new homes rose more than forecast in April, indicating residential real estate may contribute to economic growth for the first time in seven years.

Purchases rose to a 343,000 annual rate, up 3.3 percent from a revised 332,000 in March, the Commerce Department reported Wednesday in Washington. The median forecast in a Bloomberg News survey of 72 economists was 335,000. Data Tuesday showed April sales of previously owned homes rose in every region.

“It’s very clear now that the housing market has turned a corner,” said Richard DeKaser, deputy chief economist at Parthenon Group in Boston, who projected sales would rise to a 339,000 pace. “The only question is how strong the rebound is going to be. It bodes well for the broader economy.”

Job growth, improving affordability and record-low interest rates are helping propel sales at builders such as Toll Brothers. At the same time, some banks remain reluctant to lend and foreclosures continue to move through the system, signaling a sustained housing recovery will take time to take hold.

In another sign the U.S. housing market is gaining traction, a report from the Federal Housing Finance Agency Wednesday showed home prices rose 2.7 percent in the 12 months through March, the biggest year-over-year gain since November 2006. Values increased in every region.

Bloomberg survey estimates for new-home sales, which are logged when contracts are signed, ranged from 325,000 to 375,000. The Commerce Department revised the March reading up from a previously estimated 328,000.

Median sales price increased 4.9 percent from the same month last year, to $235,700, today’s report showed.

Purchases rose in three of four regions last month, led by 28 percent gains in the Midwest and West. The South showed a decline, falling 11 percent.

The number of newly constructed houses on the market rose to 146,000 from 144,000 in March, which was the fewest reported in data going back to 1963. It was the first increase in inventory since April 2007.

Because the sales rate climbed faster than inventory, the supply of new houses on the market dropped to 5.1 months’ worth from 5.2 months in March. Demand for new houses peaked at 1.28 million in 2005 during the housing boom, then fell to 306,000 in 2011, the lowest in records dating back to 1963.

Newly constructed houses made up 6.7 percent of the residential market last year, down from a high of 15 percent during the boom of the past decade. Some buyers are taking advantage of the large inventory and affordability of previously owned homes.

Article by: LORRAINE WOELLERT , Bloomberg News


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