MW: New-home sales rise to highest level since May '08
Deadline for homebuyer tax credit seen boosting sales
By Greg Robb, MarketWatch
WASHINGTON (MarketWatch) -- U.S. sales of new homes jumped nearly 15% in April to the highest level since May 2008 as homebuyers rushed to meet the deadline to qualify for tax credits.
Sales jumped 14.8% in April to a seasonally adjusted annual rate of 504,000, the Commerce Department reported Wednesday. This follows an almost 30% gain in March.
Sales in April were far beyond the 425,000 rate that economists surveyed by MarketWatch had expected.
The government has been supporting sales and home prices for about two years, providing up to $8,000 to qualified buyers. The tax credit's cutoff for contract closings is June 30 but initial agreements needed to be signed by April 30.
The looming question is what will happen when the subsidy disappears and the market must stand on its own?
Already there are some signs of cooling. The Mortgage Bankers Association reported that purchase applications fell for the third consecutive week in the week ended May 21.
By region, sales gains were strongest in the Midwest and West. Sales rose 31.6% in the Midwest and 21.7% in the West. Sales rose 10.8% in the South while sales were flat in the Northeast.
Compared with April 2009, last month's sales were up 47.8%, a rate not seen since January 1992.
In April, the number of unsold new homes on the market dropped 7% to 211,000, the fewest since October 1968. That represented a 5.0-month supply at the April sales pace, the leanest inventory since December 2005.
The median sales price of $198,400 in April was down 9.5% compared with a year earlier.
The government cautions that its housing data are subject to large sampling and other statistical errors. Large revisions are common.
It can take up to six months for a trend in sales to emerge. New-home sales have averaged 392,000 per month over the past six months
In a separate report Wednesday, the Commerce Department said orders for durable goods rose 2.9% in April, as the manufacturing sector continues to be recover strongly from the downturn in 2008 and early 2009.
