New-Home Sales Up 4.9% in April

Defying forecasts of an imminent slowdown, U.S. sales of new homes shot up in April at the fastest pace this year, the government reported Wednesday. But prices were up only slightly, and the backlog of unsold homes hit a record.

Separately, orders to U.S. factories for big-ticket manufactured goods fell 4.8% in April, the largest amount in three months, as aircraft orders plunged by 32.2% and demand for computers and other electronic products dropped by the largest amount in nearly six years.

The Commerce Department reported that sales of new single-family homes increased 4.9% last month to a seasonally adjusted annual rate of 1.2 million units, the highest since December.

Economists, who had forecast a sales decline in April, said the increase had been skewed by the fact that the government lowered sales activity significantly in previous months.

Also, they noted that the number of unsold homes on the market at the end of April rose to the highest level on record, an overhang that they predicted would depress prices.

The median price of a new home sold in April was $238,500, up just 0.9% from a year earlier, far below the double-digit price gains sellers were enjoying last year at the peak of the housing boom.

“Housing is holding up better than we had thought given how much mortgage rates have gone up, but we still expect it to weaken as the year goes forward,” said David Wyss, chief economist at Standard & Poor’s in New York.

Peter Schiff, president of Euro Pacific Capital Inc., a brokerage firm in Darien, Conn., said sales of new homes were coming at the expense of previously owned homes as buyers responded to aggressive incentive offers builders were using to move unsold homes.

Once homeowners realize they would have to lower their asking price to make a sale, this could cause a sharp drop in sales prices around the country, Schiff said.

The backlog of unsold new homes rose 2.4% to a record 565,000 at the end of April. It would take 5.8 months to deplete that backlog at the April sales pace.

Home sales were strong in all parts of the country last month except the Midwest, where sales fell 1.1%, the second straight monthly decline.

Sales were up 8.2% in the Northeast, 7.8% in the South and 2% in the West.

As for durable goods, analysts said the decline overstated the weakness in manufacturing, which they said should still show strong gains in coming months, reflecting lean inventory levels and a drive by businesses to boost capital investments.

That strength is expected to partially cushion the economy from the adverse effects of a slowdown in housing, one of the star performers in recent years.