WASHINGTON (Reuters) - New single-family home sales rose solidly in April and prices pushed higher, offering further evidence the housing market was turning the corner.
The Commerce Department said on Wednesday sales increased 3.3 percent to a seasonally adjusted 343,000-unit annual rate after a 332,000-unit pace in March.
The report, whose details were fairly bullish, came on the heels of news on Tuesday that home resales hit a two-year high in April and suggested the housing market recovery was gaining traction.
It also highlighted the economy’s underlying strength, even though job growth has slowed in recent months. The weak housing market had been the Achilles heel of the economy’s recovery from the 2007-09 recession.
“It’s encouraging. These are signs that we might be forming a bottom in housing,” said Omer Esiner, chief analyst at Commonwealth Foreign Exchange in Washington. “We’ll need to see housing shore up before we can talk about a meaningful recovery in the U.S.”
Stocks opened lower on worries about Greece’s debt problems, while Treasury debt prices rose. The dollar extended gains against the euro after the home sales data.
Compared to April last year, new home sales were up 9.9 percent. Signs of life in the housing market were also bolstered by a 4.9 percent rise in the median price of a new home last month to $235,700 from a year ago.
A separate report from the Federal Housing Finance Agency showed house prices rose 1.8 percent in March after gaining 0.3 percent in February. Prices were up 2.7 percent from year ago.
The improving housing market picture helped Toll Brothers Inc, the largest luxury home builder, report a higher-than-expected quarterly profit and a strong jump in new orders.
“The spring selling season has been the most robust and sustained since the downturn began,” Chief Executive Douglas Yearley said in a statement.
Despite the rise in sales, the housing market continues to be hamstrung by an oversupply of previously owned homes on the market - especially from foreclosures, many of which sell well below their market value.
A separate report from the Mortgage Bankers Association showed applications for loans to buy houses fell for a second week in a row last week, even though mortgage rates dropped to a record low.
While the inventory of new homes on the market rose 1.4 percent to 146,000 units last month, it remained near record lows. At April’s sales pace it would take 5.1 months to clear the houses from the market, down from 5.2 months in March.
New home sales last month were buoyed by a 28.2 percent jump in the Midwest. Sales in the Northeast rose 7.7 percent, to the highest level in over a year, while in the West sales soared 27.5 percent. Sales were down 10.6 percent in the South.
New home sales account for about 7.6 percent of the overall housing market and face stiff competition from previously the owned home segment despite low levels of stock.
Editing by Neil Stempleman