Sales of New Homes Hit a Record in April
Sales of new single-family homes rose to a record level in April, according to government figures released Tuesday, and the U.S. index of leading economic indicators rose for the fourth month in a row--signs the economy will maintain its vigor in the months ahead.
New-home sales rose 5.2% in April to an annualized rate of 888,000 units, with a boom in the South offsetting declines in other parts of the country, the Commerce Department said. The nationwide gain more than reversed March’s 4.2% decline.
Sales climbed 18.1% in the South to a 418,000-unit annualized rate.
In the West, sales edged down 0.5% to a rate of 218,000 units. The Midwest saw a more dramatic 9.2% drop to 157,000 units, while the Northwest saw a 3.1% decline a 95,000-unit pace.
Separately, the Conference Board said its index of leading economic indicators, intended to project economic activity over the next six months, rose 0.1% in April, indicating continued growth but at a more modest pace than early this year. The index hasn’t declined since April 1997. The performance suggested almost no risk of recession this year, the board said.
Six of its 10 components increased, with growth in the money supply and rising stock prices accounting for much of the gain. But the factory workweek declined and suppliers’ delivery times shortened, signs that Asia’s turmoil is hurting U.S. manufacturing.
“Tepid growth in the leading economic indicators suggests the economy is slowing,” said economist Gerald D. Cohen of Merrill Lynch. As that occurs, economists expect home buying to decline.
“It’s hard to imagine going up further, but I don’t see that we’re set for a crash, either,” said economist Michael Carliner of the National Assn. of Home Builders.
Asia’s weakness, while pinching U.S. manufacturers, has helped keep long-term interest rates low. Mortgage rates have hovered just above 7% for much of the year, keeping payments affordable.
April marks the eighth consecutive month of home sales above 800,000, the longest such period on record. The next-longest string above 800,000--five months--occurred in 1977, when the population was 18% smaller.
Analysts said sales in the South probably were helped by second-home buying. Dry weather also helped builders in the region.
Associated Press and Bloomberg News were used in compiling this report.
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Seasonally adjusted annual rate, in thousands of units:
Source: Commerce Department
Index of Leading Economic Indicators
Seasonally adjusted index; 1987=100.
Source: Conference Board