Policy: Economy

Housing market rebounds in April, rising to 433,000 new-home sales

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The U.S. housing market showed resilience in April, allaying fears that the recovery from the collapse of the housing bubble had been derailed in March.

Federal government agencies reported Friday that new-home sales beat expectations in April, rising to 433,000, up from a revised 407,000 in March.

Sales of existing homes also rose for the month, the National Association of Realtors reported Thursday, from 4.59 million in March to 4.65 million in April. That improvement, however, was less than analysts expected.

Housing starts for April were much stronger than expected, rising from 947,000 at an annual rate in March to 1.07 million in April, the federal government reported last Friday.

While new and existing home sales remain well below the levels from a year ago, the data from April suggest that policymakers can feel relieved that the housing recovery is still underway, if weakened.

At their April meeting, Federal Reserve officials identified a slowdown in the housing market as the biggest threat to the tepid economic recovery.

In particular, according to the minutes from the meeting released Wednesday, members of the central bank worried that rising prices and tight mortgage credit could be slowing housing sales.

Home sales fell late last spring after the Fed hinted at its plans to slow its purchases of Treasury and mortgage-backed securities, leading to an increase in the average rate for a 30-year, fixed-rate mortgage of roughly one percentage point.

April’s data, unlike the news from March, show home sales headed in the right direction, but still significantly off last year’s levels. Existing-home sales remain 6.8 percent below the 4.99 million-unit level in April 2013, according to the NAR.

New-home sales are an estimated 4.2 percent below last year's 452,000 mark for April, according to the Census Bureau and the Department of Housing and Urban Development.

Nevertheless, there are some signs that the underlying trends in the housing market are favorable.

One is that prices have continued to rise through the decline in sales over the last year.

As a result, the number of sales driven by the number of underwater homeowners and foreclosures has fallen. Those have been a significant source of sales throughout the wake of the housing crash.

Another is rising inventories. The NAR reported Thursday that unsold inventory was 6.5 percent higher in April than it was a year ago, when there was a 5.2-month supply. It now appears that home inventories bottomed out late in 2013.


Rising inventory is likely to moderate further increases in prices. “We have long suspected that overly tight inventory conditions were restricting transaction volumes,” Deutsche Bank economists wrote in an analysis Thursday.

The bottom line: April’s housing numbers mostly fell short of expectations, and remained well below where they were a year ago. On the other hand, the modest uptick in sales and continued rise in construction starts should reassure policymakers at the Fed and elsewhere that rising rates and prices haven’t totally choked off the recovery.

This story was first published at 10:14 a.m. and has been updated.

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