Sales of New Homes in U.S. Rose More Than Forecast in April

Demand for new U.S. homes increased more than forecast in April as low mortgage interest rates and an improving economy drew buyers. Purchases rose to a 343,000 annual rate, up 3.3 percent from a revised 332,000 in March, the Commerce Department reported today in Washington. The median forecast in a Bloomberg News survey of economists was 335,000. Data released yesterday showed sales of existing homes rose in April in every region. Job growth, affordability and record-low interest rates are bringing single-family homes within reach of more buyers, chipping away at a weakness in the world’s largest economy as risks from Europe’s debt crisis climb. At the same time, banks remain reluctant to lend and foreclosures continue to move through the system, which means a sustained housing recovery will take time to develop. “It’s very clear now that the housing market has turned a corner,” said Richard DeKaser, deputy chief economist at Parthenon Group LLC in Boston. “The only question is how strong the rebound is going to be. It bodes well for the broader economy.” Stocks held earlier losses after the report amid concern that Greece may leave the euro as the region’s leaders meet in Brussels. The Standard & Poor’s 500 Index dropped 0.7 percent to 1,307.13 at 10:14 a.m. in New York. Survey Results Estimates of the 72 economists in the Bloomberg survey ranged from 325,000 to 375,000. New home sales are logged when purchase contracts are signed. The March reading was revised up from a previously estimated 328,000. The median sales price increased 4.9 percent from the same month last year, to $235,700, today’s report showed. Purchases increased in three of four U.S. regions last month, led by 28 percent gains in both the Midwest and West. The South was the only area to show 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 rate of sales climbed faster than inventory, the month’s supply of new houses on the market dropped to 5.1 months 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 million in 2011, the lowest in records dating back to 1963.