WASHINGTON – Americans ramped up their purchases of new homes in April to the highest level since January 2008, evidence of a strong start to the spring buying season.
The Commerce Department said Tuesday that new home sales jumped 16.6 per cent last month to a seasonally adjusted rate of 619,000, up from a revised total of 531,000 in March.
Steady job gains and low mortgage rates have encouraged more Americans to buy new homes. That trend is driving home construction and helping support the economy.
The new home sales figures are notoriously volatile, particularly at the regional level. Last month, new home purchases leapt 53 per cent in the Northeast and 19 per cent in the West. They fell 5 per cent in the Midwest and jumped 16 per cent in the South.
The housing market is still healing from the long-term consequences of the bubble and bust a decade ago. Last month’s sales aren’t far from the historical long-run pace of about 650,000 a year.
Developers have been disproportionately targeting higher-income buyers: The median price of a new home that sold in April was $321,100, a record high, up from $297,900 in March.
Those sharp price gains will likely put many new homes out of reach for some buyers, particularly younger first-time purchasers.
Still, more building is expanding the supply of homes available for sale, which could help relieve some pricing pressure. The number of new homes for sale is 17.4 per cent more than a year earlier. That could help offset a shortage of existing homes for sale, which have fallen 3.6 per cent in the past year.
The housing market is showing signs of picking up after a weak start to the year, though growth remains modest. Lower mortgage rates are helping: The average 30-year fixed rate mortgage was just 3.58 per cent last week, according to mortgage buyer Freddie Mac.
Sales of existing homes, which make up 90 per cent of the housing market, rose in April for a second straight month to an annual pace of 5.45 million, a figure consistent with a solid economy.
And the construction of new homes rose 6.6 per cent in April to an annual rate of 1.17 million houses and apartments. That mostly reversed a steep drop in March. Builders are breaking ground for new homes at a faster pace than they did last year.