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U.S. home sales plunge
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May 24, 2001: 11:53 a.m. ET
New home sales fall 9.5% in April, far more than expected
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NEW YORK (CNNfn) - Sales of new homes posted their biggest decline in four years in the United States last month, the government reported Thursday, coming in much weaker than Wall Street economists had expected.
Sales of single-family homes tumbled 9.5 percent to an annual rate of 894,000 after rising a revised 2.3 percent to 988,000 units in March, the Commerce Department reported. Economists on average expected the rate to fall to 975,000 units, according to a survey by Briefing.com.
The drop was the biggest since a 10 percent decline in April 1997, Reuters reported.
On Wall Street, investors showed little reaction to the news, with stocks edging lower and Treasury bond prices little changed at midday.
The housing market has held up fairly well despite weakness in the U.S. economy that has prompted the Federal Reserve to cut interest rates aggressively this year in a bid to prevent the economic slowdown from worsening.
Though home sales have slowed as job cuts and the unemployment rate have increased, economists still think the housing market is strong.
"The revisions are not as big as we feared," said Ian Shepherdson, chief economist for High Frequency Economics Ltd. "The new April number shows sales at their lowest level since November, but the previous four months were exceptionally strong, in part due to favorable weather. Given the strong trend in mortgage applications, these data likely do not signal real housing weakness."
The market has been helped in part by low mortgage rates. In April, the average rate on a 30-year fixed-rate mortgage was 7.07 percent, down from 8.20 percent in April 2000. Last week, the rate stood at 7.14 percent.
Go mortgage-rate shopping here
April's figure in part reflects a change in the government's method of calculating new-home sales. That change resulted in monthly sales numbers being revised downward. Thursday's report was the first to use the new calculation, which no longer takes into account new homes under construction before permits were issued. The old system had the effect of boosting sales figures.
By region, sales in the Northeast fell 6.3 percent to an annual rate of 75,000 in April. In the Midwest, they declined 10.9 percent to a rate of 164,000. In the South, they fell 13.1 percent to a rate of 437,000, and in the West sales slipped 1.4 percent to a rate of 218,000. 
-- from staff and wire reports
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