Builders sold more U.S. new homes than projected in April as cheaper borrowing costs and job gains drew more buyers into the market.
Sales climbed 2.3% to a three-month high of 454,000 homes at an annualized pace from a 444,000 rate in March that was faster than first estimated, the Commerce Department said today in Washington. The median estimate of 76 economists surveyed by Bloomberg called for a gain to 425,000. The data included revisions back to January 2011. The median selling price rose to a record on sales of more expensive properties.
Demand for new and previously owned homes is sustaining progress in residential construction that is poised to keep fueling the economic expansion. Builders such as PulteGroup Inc., home-improvement retailers like Lowe’s Cos. and lenders are benefiting from higher property values, lower mortgage rates and a pickup in household formation.
“In terms of growth, housing is the strongest part of the economy right now,” Jim O’Sullivan, chief U.S. economist at High Frequency Economics in Valhalla, New York, said before the report. “As employment continues to recover, household formation should recover. Right now both trends look positive.”
Stocks held losses after the figures as data showed Chinese manufacturing unexpectedly shrank. The Standard & Poor’s 500 Index dropped 0.9% to 1,640.73 at 10:05 a.m. in New York.
Economists’ estimates ranged from 406,000 to 440,000 after a previously reported 417,000 pace in March.
The median selling price increased 14.9% in April from the same month last year to a record $271,600, today’s report showed. The gain reflected increases in sales of homes costing $400,000 or more. Purchases of homes priced less than $300,000 decreased.
Purchases rose in two of four U.S. regions, led by a 10.8% jump in the West. Sales in the South rose, while purchases dropped in the Northeast and Midwest.
The supply of homes at the current sales rate held at 4.1 months. There were 156,000 new houses on the market at the end of the month, the most since October 2011.
Sales of new properties, which are tallied when purchase contracts are signed, are considered a more timely measure of the market than sales of previously owned dwellings, which are counted when a sale is final. New-home sales accounted for about 7% of the residential market in 2012.