US New Home Sales at 2-Year High in April

Good news for sellers--there is decreasing inventory on the market, so that should slow price decreases. Buyers--you have historically low interest rates and the lowest prices since December 2003. If prices are stabilizing, there are opportunities to lock into low prices and low rates. I'll repeat my mantra for buyers--if you like the house, and the payment makes sense, this is a good time to get back into the market.

Sales of newly built U.S. single-family homes rose faster than expected in April to their highest level in nearly two years, government data showed on Wednesday, as buyers signed contracts to benefit from a popular government tax credit.

The Commerce Department said sales jumped 14.8 percent to a 504,000 unit annual rate, the highest since May 2008, from an upwardly revised 439,000 units in March. It was the second straight month that new home sales rose.

Analysts polled by Reuters had expected new home sales to increase to a 430,000 unit annual pace from March's previously reported 411,000 units.

Buyers had to sign contracts by April 30 and close on the home by the end of June to qualify for the federal tax credit.

New home sales are measured at contract signing and analysts believe buying activity will temporarily ebb in May.

However, they expect sales to pick up toward year-end as the economic and labor market recovery gain more vigor.

Data on Monday also showed the tax credit spurred sales of previously owned homes, which are recorded at contract closing, to a five-month high in April. Existing home sales are expected to rise through June when the tax credit ends.

Despite the jump in sales, the median sale price for a new home dropped a record 9.7 percent from March to $198,400, the lowest since December 2003, the Commerce Department said. In the 12 months to April, the median sale price declined 9.5 percent.

The number of new homes on the market fell a record 7 percent to 211,000 units in April, the lowest since October 1968. Last month's sales pace left the supply of homes available for sale at 5.0 months' worth, the lowest since December 2005, from 6.2 months 'worth in March.

Published by: Reuters. Original article here: http://www.cnbc.com/id/37354168

Blogger Matthew Allan is a specialist in Savannah Real Estate, focusing on Savannah's downtown historic districts, including the Landmark Historic District, Victorian Historic District, Thomas Square Historic District, Starland Historic District, Baldwin Park, and Ardsley Park Historic District.