New-Home Sales Inch Up, Optimism Builds

Sales of new single-family homes in April continued to inch up, increasing optimism in the building industry that a recovery is finally taking hold. New-home sales rose 3.3 percent in April and were up 9.9 percent year-over-year, according to new Commerce Department housing data released Wednesday. The increase in April sales activity is in line with other important housing measures that have shown continued, gradual improvement from the first quarter as more consumers look to take advantage of today's low interest rates and affordable home prices," says Barry Rutenberg, chairman of the National Association of Home Builders. "In markets where demand is rising, we could be seeing a faster pace of recovery if not for persistently tight lending conditions that are slowing both the building and buying of new homes." New-home sales rose the most in the Midwest, by 28.2 percent in April, and by 27.5 percent in the West. The Northeast saw new-home sales rise by 7.7 percent in April, while the South posted a 10.6 percent decline last month. The inventory of new-homes remains historically low at a 5.1-month supply at the current sales pace. But housing experts say the record low inventories may prove an eventual boost for future housing prices. Home prices for new-homes are up nearly 5 percent compared to a year earlier, with the median price at $235,700 from April, the Commerce Department reported. In another optimistic sign at recovery for the housing market: The National Association of REALTORS® reported Tuesday that sales of existing homes also increased in April, rising 3.4 percent in April compared to March and increasing 10 percent year-over-year. Source: National Association of Home Builders and “New-Home Sales Amplify Optimism About Housing,” The Wall Street Journal (May 23, 2012)