New-home sales surge to highest level in eight years
Purchases of new homes surged in April to the highest level since the start of 2008, pointing to a robust spring selling season for builders, according to Commerce Department data released Tuesday.
Key points:
Rose 16.9 percent to 619,000 annualized rate (forecast was 523,000).
Monthly increase was biggest since 1992, while pace was strongest since January 2008.
Median selling price jumped 9.7 percent to a record $321,100.
Number of homes sold but not yet under construction climbed to 209,000, the highest since May 2007.
Big picture:
The rebound in purchases of new properties, combined with stronger demand for previously owned homes, signals housing is being energized by healthy employment gains and cheap borrowing costs. The jump in the number of homes sold and awaiting the first shovel in the ground indicates home construction will help add to economic growth in the second quarter.
Economist takeaways:
“The outlook for housing is very strong for the remainder of the year, even with the prospect for modestly higher interest rates and relatively modest pace of economic expansion,” said Russell Price, a senior economist at Ameriprise Financial Inc. in Detroit. “There was a little bit more inventory at the upper price points, and you might be seeing some people nudged off the fence by the prospect of higher interest rates.”
“Easier credit conditions mean that the sustained surge in employment is finally boosting the pool of potential buyers who can qualify for mortgages,” Ian Shepherdson, chief economist at Pantheon Macroeconomics Ltd., said in a research note.
“We don’t now expect sales to rise much further in the short-term, but we do hope the trend can be established around the 600K mark over the next few months,” he said.