New Home Sales Surge to Eight-Year High

Purchases of new homes in the U.S. surged in April to the highest level since the start of 2008, pointing to a robust spring selling season for builders.

Sales jumped 16.6% to a 619,000 annualized pace, and purchases in the first three months of the year were revised higher, Commerce Department data showed Tuesday. The rate exceeded the most optimistic forecast in a Bloomberg survey. The median sales price climbed to a record, reflecting a pickup in signed contracts for more expensive properties.

The rebound in purchases signals housing was returning to more stable footing, helped by healthy employment gains and cheap borrowing costs. The number of homes sold and not yet under construction climbed to the highest level since May 2007, indicating homebuilding will help add to economic growth.

“The spring selling season is off to a decent start,” Ryan Sweet, a senior economist at Moody’s Analytics Inc. in West Chester, Pa., said before the report. “I think it’ll add more to growth this year than it has in the past several.”

The median forecast in the Bloomberg survey called for the rate to accelerate to 523,000, with estimates ranging from 508,000 to 533,000. The Commerce Department revised the March reading up to a 531,000 pace from a previously estimated 511,000.

The report, which is volatile month to month, said there was 90% confidence the change in sales last month ranged from a 1.2% gain to a 32% increase. With Tuesday’s release, the Commerce Department revised data back to January 2014.

The gain in demand last month was paced by the South, where sales climbed 15.8% to a 352,000 annual rate, the strongest since December 2007. Purchases rebounded in the West and climbed in the Northeast.

The supply of homes fell to 4.7 months from 5.5 months in March. There were 243,000 new houses on the market at the end of April, little changed from a month earlier.

The median sales price of a new house increased 9.7% from April 2015 to a record $321,100. Purchases climbed for dwellings priced at $300,000 or more.

New-home sales, which account for about 10% of the residential market, are tabulated when contracts are signed. That makes them a timelier barometer than transactions on existing homes.

Previously owned homes sold in April at the fastest pace in three months, led by a surge in the Midwest, National Association of Realtors data showed last week. Closings advanced 1.7% to a 5.45 million annual rate. Prices climbed from April 2015 as the number of dwellings on the market fell from a year earlier.

The residential real estate market is benefitting from solid job growth and low interest rates, while limited inventory keeps prices elevated.

The jobless rate was 5% in April, lingering near an eight-year low reached earlier this year, and employers added 160,000 workers to their payrolls.

The average for a 30-year fixed rate mortgage was 3.58% in the week ended May 19, just above the record-low 3.31% reached in 2012, according to Freddie Mac figures dating to 1971.