The Housing Market Receives Another Impressive Surprise
The Fed-induced recovery in the real estate market continues to boost some areas of the economy, as new single-family home sales in the United States rose more than expected in April.
On Thursday, the Commerce Department reported that purchases of new homes, measured by contracts signed, increased 2.3 percent to a seasonally adjusted 454,000-unit annual pace last month, compared to the revised March rate of 444,000 units. This is the second best level since July 2008. Home sales are up 29.0 percent compared to April 2012. However, as the chart below shows, the real estate market is still well below its glory days.
The median estimate of 76 economists polled by Bloomberg only expected a gain of 425,000 units. Meanwhile, another survey by Reuters also called for 425,000 units.
The Commerce Department also reported the median sales price of new houses sold in April 2013 was $271,600, the highest level on record. The average sales price came in at $330,800. Although low interest rates and inventory levels have been supporting the real estate market, the average sales price of $279,900 in March was the lowest since June 2012.
The seasonally adjusted estimate of new houses for sale at the end of April was 156,000 units. This represents a supply of 4.1 months at the current sales rate, near record lows. The all-time high for supply hit 12.1 months in January 2009.
Shortly after the report, housing-related stocks such as Home Depot (NYSE:HD) and Lowe’s (NYSE:LOW) dropped about 1.5 percent. However, home builders such as Toll Brothers (NYSE:TOL) and Lennar (NYSE:LEN) both climbed higher.
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