U.S. Home Sales Surge to Record in April as Prices Increase 15.1%

The number of homes sold in the U.S. surged 4.5%, more than expected, to a record high in April as home prices posted their biggest annual gain in almost 25 years, a trade group said Tuesday.

Sales of previously owned single-family houses and condominiums rose to a seasonally adjusted annual rate of 7.18 million units last month, eclipsing the record of 7.02 million logged in June of last year, the National Assn. of Realtors said.

The national median home price rose 15.1% to $206,000 from the same month a year earlier, the Realtors report showed. That price increase was the biggest since November 1980, when the median rose 15.6%, the group said.

The rise in prices is fueling worries of a housing bubble as buyers turn to interest-only loans or other instruments to stretch their resources and evidence of speculative buying grows. But Federal Reserve Chairman Alan Greenspan said last week that although there may be some “froth” in the housing market, he does not see a national housing bubble.

National Assn. of Realtors Chief Economist David Lereah said Tuesday that while low rates and a lean inventory of homes available for sale fed demand, the trade association was watching the rise in home values closely.

“The record was basically unexpected, but low mortgage rates were unexpected as well,” he said. “Prices are now becoming a concern. There’s a speculative element in home buying now.”

Analysts had expected the number of U.S. homes sold overall to edge up to a 6.9-million-unit rate in April from the 6.89-million-unit pace originally reported for March.

Single-family home sales rose 4.5% last month to a rate of 6.28 million, from 6.01 million in March. Condo sales climbed 4.8% to a 899,000-unit rate from an 858,000-unit pace in March.

Mortgage interest rates fell to an average of 5.71% for the popular 30-year fixed-rate mortgage last week, housing finance provider Freddie Mac said. That is the lowest rate for the long-term home loan since February.

Reuters and Bloomberg News were used in compiling this report.