New home sales edged slightly higher once again in April as the housing market continues to give a lift to the U.S. economy.
New homes sold at an annual pace of 454,000 in the month, up 2% from March, and a 13% jump from the year earlier sales pace. Sales readings for the previous three months were also all revised higher.
A tight supply of new homes for sale helped to boost the median sales price to $271,600, up 8% from March and 15% from a year ago.
"It's official: housing is back on solid footing," said Bob Walters, chief economist of Quicken Loans. "Today's new home sales number...provides ample evidence that Americans are becoming bullish on housing."
The report comes the day after the National Association of Realtors reported another rise in the pace of sales of previously-owned homes. While new home sales are a smaller part of the market, they can have a greater impact on the overall economy because of the labor required to build them. They also typically require more spending on new appliances, carpeting and other furnishings sometimes manufactured at U.S. factories.
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The recovery in the housing market so far this year has been a major driver of overall economic growth, lifting not just the pace of home building but also retail sales. Near record low mortgage rates coupled with improving unemployment, a drop in foreclosures and a tight supply of homes for sale have all combined to lift overall home prices.
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Shares of the leading home builders, including KB Home (KBH), Lennar (LEN), PulteGroup (PHM), D.R. Horton (DHI) and Toll Brothers (TOL), which had been lower in early trading, all turned higher following the report. All those stocks are up more than 10% so far this year, and most have outpaced the broader market.
Even with the pick up in the sales of both new and previously owned homes, the pace of sales is still far below past levels. April's rate was down 67% from the record level hit in July 2005, and down 41% from the average sales pace during the ten years leading up to 2001, the period before falling mortgage rates led to the inflating of the housing bubble.
