Home sales rise - still near 17-year low
Sales of new homes in April were up slightly from March, but are down 42% from 2007.
NEW YORK (CNNMoney.com) -- New home sales rose unexpectedly in April but remained near historically low levels, according to a key government report on the battered housing market.
April sales came in at a seasonally adjusted annual rate of 526,000, a Census Bureau report showed, up 3.3% from March. The reading was above the consensus forecast of 520,000, according to economists surveyed by Briefing.com.
But home sales were down 42% from a year earlier. April's reading was the second-lowest annual rate since October 1991, behind March of this year. A preliminary report had March's new home sales level at 526,000 - the same as April's - but March's number was revised down to 509,000 in Tuesday's report.
"The momentum is still downward, and that April number is still weak," said National Association of Home Builders chief economist David Seiders. "April marks only a partial reversal of that steep March decline."
The median price of a new home sold in April was $246,100, up 1.5% from $242,500 a year earlier, according to the report.
This slight bump probably doesn't accurately capture the weakness in prices for new homes, since about three out of four builders have reported having to pay buyers' closing costs or offer other incentives such as expensive features for free in order to maintain sales.
"The price data in this report is notoriously unreliable," said Seiders. "The Case-Schiller number is a much better gauge."
The Standard & Poor's/Case-Shiller national home price index,also released Tuesday, fell 14.1% in the first quarter of 2008 compared with a year earlier. That marked the index's lowest reading since its inception in 1988.
Prices have been driven down recently by the glut of new homes on the market.
The new homes report showed 181,000 completed new homes available at the end of the month, bringing total inventory - including new homes under construction and not yet started - to 456,000, equal to a seasonally adjusted 10.6-month supply.
Seiders noted that continued price declines and lower building rates will help move the market back to equilibrium and help heal a slumping U.S. economy. But with prices still declining, potential buyers are still shying away.
"Price declines do help restore affordability, but the other side of the price sword is that falling prices increase [buyer] expectations of further declines," he said.
The report is the latest sign of trouble in the overall housing market.
Friday, the National Realtors Association reported existing home sales fell to near-record lows in April, and an Office of Federal Housing Enterprise Oversight report said Thursday the prices of homes sold in the first quarter of 2008 posted a record decline.