New-Home Sales Get a Boost

More people bought new homes last month with new-home sales rising 7.3 percent, the Commerce Department reported on Tuesday. It was the second straight month that new-home sales were up.

New-home sales rose to a seasonally adjusted annual rate of 323,000 homes in April, which is its highest level since December.

However, overall sales for the year still remain well below what economists consider a 700,000 healthy pace for the new-home sector.

The new-home market for the last five years has faced declines. It continues to battle against a glut of foreclosures across the country at ultra-low prices that have made competing a challenge.

Builders are keeping inventories low: A record low of 175,000 new homes were available for sale last month.

Meanwhile, the median price of a new home rose more than 2 percent in April, compared to the previous month, to $217,900. New-home prices are more than 30 percent higher than the median price of existing homes.

Source: “New-home Sales Up 7.3 Pct. in April After Sluggish Start to Year,” The Associated Press (May 24, 2011) and “U.S. April New Home Sales at 4-Month High,” Reuters News (May 24, 2011)