Purchases of new U.S. homes rose in April by the most in six months as buyers began to respond to falling mortgage rates.
The 6.4 percent increase to a 433,000 annualized rate followed a revised 407,000 in March that was larger than initially estimated, Commerce Department data showed today in Washington. The median forecast of 75 economists surveyed by Bloomberg called for the rate to accelerate to 425,000. The April gain reflected a surge in Midwest sales.
Declining borrowing costs and greater employment opportunities raise the prospects for an industry that has struggled to build on gains made earlier last year. A pickup in construction that puts more properties on the market and slows price gains would help improve affordability and attract buyers.
“The deep freeze is over and I think we can expect new home sales to continue to rise,” said David Berson, chief economist at Nationwide Insurance in Columbus, Ohio, who projected a 432,000 rate of April sales. “It’s better; it’s still not strong.”
Estimates for April home sales ranged from 395,000 to 460,000 after a previously estimated 384,000 pace a month earlier. New-home sales, which account for about 7 percent of the residential market, are tabulated when contracts are signed, making them a timelier barometer than transactions on existing homes.
Stocks held gains after the report, with the Standard & Poor’s 500 Index rising 0.3 percent to 1,897.57 at 10:27 a.m. in New York.
Figures yesterday from the National Association of Realtors showed a 1.3 percent gain in closings on sales of previously owned homes. Closings typically occur a month or two after a contract is signed. A bigger supply of properties helped lure buyers, the data showed. The number of available properties climbed to an almost two-year high, helping slow the pace of price appreciation.
At the same time, the existing-home sales figures included signs of underlying softness. Investors continued to play a big role in the market, the April increase was driven mainly by purchases of condominiums and the share of first-time buyers was little changed.
Lower limits on loans guaranteed by the Federal Housing Administration are also a hurdle for the industry.
Today’s report showed the median sales price of a new house declined 1.3 percent from April 2013 to $275,800.