New Home Sales Rebound, Inventories Hit a 3½-Year High

New Home Sales
Charlie Neibergall/AP
By Lucia Mutikani

WASHINGTON -- Sales of new U.S. single-family homes rose more than expected in April and the stock of houses on the market hit a 3½ year high, further signs the sputtering housing recovery may be close to picking up.

The Commerce Department said Friday sales increased 6.4 percent to a seasonally adjusted annual rate of 433,000 units, ending two straight months of declines.

"We are not getting a snapback so far this spring. It's just a modest improvement from the harsh winter. The trend is still soft," said Michelle Meyer, senior economist at Bank of America Merrill Lynch (BAC) in New York.

Economists had forecast new home sales at a 425,000-unit pace last month. Homebuilder shares rallied on the report. Lennar (LEN) rose 2.2 percent and D.R. Horton (DHI), gained 2 percent.

Compared to April last year, sales were down 4.2 percent.

A run-up in mortgage rates last year and rising home prices, which have outpaced wage growth, are weighing on housing. Home sales are also being hampered by a shortage of properties.

The slump, which started in the second half of last year, has caught the attention of the Federal Reserve, which is scaling back the amount of money it pumping into the economy through monthly bond purchases.

Minutes of the Fed's April 29-30 policy meeting acknowledged the housing weakness.

Officials viewed a range of factors, including "higher home prices, construction bottlenecks stemming from a scarcity of labor and harsh winter weather, input cost pressures, or a shortage in the supply of available lots" as hurting activity.

But there are signs a turnaround is imminent.

Sales of previously owned homes increased in April and the inventory of houses was the highest in nearly two years, a report showed on Thursday.

According to Freddie Mac, the fixed 30-year mortgage rate fell to an average of 4.14 percent this week, a near seven-month low, from an average of 4.20 percent the prior week. That should help to improve affordability.

Last month, new home sales jumped in the Midwest to their highest level since November 2007. Sales also rose in the South, but were flat in the West. In the Northeast, sales recorded their largest decline since October 2012.

The inventory of new houses on the market increased 0.5 percent to 192,000 units, the highest level since November 2010. While the stock of new houses on the market has come off a record low hit in July 2012, it remains less than half of its pre-recession level.

At April's sales pace it would take 5.3 months to clear the supply of houses on the market, down from 5.6 months in March. With inventories improving, the median price of a new home last month fell 1.3 percent to $275,800 from April last year.

-Additional reporting by Richard Leong in New York.


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31 Comments

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Dennis

Thia article is all hype.

May 23 2014 at 4:02 PM Report abuse +1 rate up rate down Reply
tmlbtb

Close to 50% of sales have been cash. Hedge funders buying up blocks of houses in places like Las Vegas, Phoenix, etc.

May 23 2014 at 2:33 PM Report abuse +4 rate up rate down Reply
mily469

...says senior economic analyst for bank of americal merrill lynch. what a crock of you know what. these people have zero shame. I see more foreclosed homes in my area yet again this year next to the empty ones from a few years ago.

May 23 2014 at 2:29 PM Report abuse +4 rate up rate down Reply
1 reply to mily469's comment
dopey.obamite

All she said was we're not seeing the snap back so far this year. Holy crap mily...WTF just happened? Did you BOA/ML and it triggered this pavlovian response?......veins popping out from your head.....gnawing on your keyboard.

May 23 2014 at 5:45 PM Report abuse -1 rate up rate down Reply
1 reply to dopey.obamite's comment
mily469

no.

May 24 2014 at 3:07 PM Report abuse rate up rate down
militiaman2013

They just left out one little bit of information. The Banks are buying these homes and placing them back on the market or selling them to other Banks or Real Estate investment pools, it's all a scam.

Yesterday Barclay's was fined for fixing the price of Gold, the whole world has been fixed by the 1% and this housing sham is no exception.

May 23 2014 at 2:23 PM Report abuse +4 rate up rate down Reply
justoldog

By "Recovery" I guess you mean the average working person still can't afford to buy a home??

May 23 2014 at 2:21 PM Report abuse +1 rate up rate down Reply
1 reply to justoldog's comment
mitchnoconnell

The nation is fully recovered despite President Obama's best efforts to derail our robust Republican booming economy. In fact we are mulling legislation to roll back the minimum wage since the economy is doing so well.

May 23 2014 at 10:26 PM Report abuse -1 rate up rate down Reply
jpfmtka

In my area homes have increased in value about 15% in the last five years. In my subdivision, most homes sell before they hit the market. The exception was last week when one required a full day to sell for asking. For the record, in my immediate area homes here range from the mid 400,000's to over a million. The sales are generally to young families and involve financing. No investors, no all cash deals, just traditional folks buying traditional homes through traditional means.

May 23 2014 at 1:12 PM Report abuse rate up rate down Reply
1 reply to jpfmtka's comment
militiaman2013

"Traditional folks financing million dollar homes" LMAO whatever your smoking is working.

May 23 2014 at 2:24 PM Report abuse +4 rate up rate down Reply
dopey.obamite

This article is funny.

May 23 2014 at 12:59 PM Report abuse -1 rate up rate down Reply
ign.cmk

korrectionelecshun, a piece of friendly advice for you. Tell the WHOLE story, not just the little bits you like.

I hate watching you make a joke of yourself.

May 23 2014 at 12:25 PM Report abuse +1 rate up rate down Reply
1 reply to ign.cmk's comment
texastotenmom

"IF YOU WANT TO KEEP YOUR OWN HEALTH INS YOU CAN"~~"BUT WHAT DIFFERENCE DOES IT MATTER""....THATS THE WHOLE STORY~~OBAMIT==UNEDUCATED ,INCOMPETENT LIAR !!!!!

May 23 2014 at 3:30 PM Report abuse -2 rate up rate down Reply
1 reply to texastotenmom's comment
ign.cmk

You forgot to switch your screen name korrectionelecshun.

May 23 2014 at 3:56 PM Report abuse rate up rate down
Iselin007

It's funny sometimes they tear down old housing and build a luxury home. The problem is they hook in to old infrastructure sewer pipes, drains,and gas lines,ect . The houses usually get rented out while they wait for suckers to flip them to.

May 23 2014 at 11:47 AM Report abuse +1 rate up rate down Reply
Iselin007

Retail can not replace full time manufacturing jobs. The more the BLS stuffs other categories in their new favorite services the more they bury facts.

The longer they play this game of trade deals the more damage will be done.

May 23 2014 at 11:28 AM Report abuse +1 rate up rate down Reply