Sales of New Homes Rise 10.9% in April but Still Lag

Sales of new homes rose 10.9% in April after declining during the previous two months, but the pace of sales still was running well behind that of the last two years, the government reported today.

The Commerce Department said sales of new single-family homes rose to a seasonally adjusted annual rate of 620,000 units in April after dropping 10.4% in March and 10.9% in February. Sales had risen 4.6% in January.

While April’s 10.9% jump in sales was the biggest increase since a 13.9% surge in February, 1988, the pace of sales still was well behind the 676,000 new homes sold in 1988 and the 671,000 sold in 1987.

For the first four months of the year, new home sales were 4.7% lower than in the same period a year earlier.

The housing industry has been among the sectors of the economy hardest hit by the Federal Reserve’s campaign to push up interest rates in an effort to slow economic growth and thus restrain inflation.

Fixed-rate mortgages in April averaged between 10.99% and 11.11%, down only slightly from a peak of 11.22% in March.

April’s partial rebound in home sales was concentrated in the West, where sales rose 31.3% after falling 26.1% during March. Sales also rose in the South, climbing 21.2% in April after dropping 16.8% in March.

Sales were down last month elsewhere in the country. In the Northeast, sales fell 17.2% in April after surging 33.3% in March. In the Midwest, sales dropped 6.8% after falling 3.7% in March.

The increase in sales was accompanied by a $9,000 drop in the median price of the homes sold, the first decline since last November. The April median price for a new home was $117,000, meaning half the homes sold for more and half for less.