New-home sales up, but pace remains sluggish
Tuesday, May 24, 2011
WASHINGTON (AP) — More people bought new homes for a second straight month in April, a hopeful sign. Still, sales remain far below a pace that would signal a turnaround for the depressed housing market.
New-home sales rose 7.3 percent last month to a seasonally adjusted annual rate of 323,000, the Commerce Department said Tuesday. A healthy real estate market would produce about 700,000 new-home sales a year.
People have little incentive to buy new homes, in part because they’re comparatively expensive. The median price of a new home rose more than 2 percent from March to $217,900. New-home prices are more than 30 percent higher the median price of re-sales — twice the normal markup.
The latest sales numbers come in the midst of a weak spring home-buying season. Analysts had been forecasting an uptick in sales for the past several months. It hasn’t happened. April’s new-home sales are 23 percent lower than in the same month last year.
Many would-be buyers of new homes are instead favoring older, discounted re-sale homes, said Paul Bell, a Realtor with the Prudential Americana Group in Las Vegas.
“That’s where the deals are,” Bell said.
Shares of homebuilder companies rallied briefly after the report on new-home sales suggested that builders might step up construction. But stocks quickly fell on concerns over Europe’s lingering debt crisis.
The housing sector remains the weakest part of the U.S. economy, noted Ian Shepherdson, chief U.S. economist at High Frequency Economics.
Sales of new homes have declined 18 percent in the nearly two years since the recession ended.
Last year, Americans bought the fewest number of new homes on records going back 47 years. High unemployment, tight credit and a lingering fear that prices will fall further have discouraged many would-be buyers.