Wednesday, May 28, 2008

US New Home Sales Rrise 3.3% In April

Source : Channel NewsAsia, 27 May 2008

WASHINGTON: Sales of new homes across the United States rose an unexpected 3.3 percent in April from the prior month, to a seasonally-adjusted annual pace of 526,000 homes, a government report showed on Tuesday.

The spike in sales confounded most economists forecasts of a sales decline last month.

New home sales in March, however, were revised lower to 509,000 properties compared with an initial tally of 526,000, according to the Commerce Department survey.

Although activity rose over the month, sales of new homes in the 12 months to April have dived a hefty 42 percent in the midst of a persistent housing market slump.

Turnover of new homes has fallen steadily in the past two years, excepting some month-on-month gains, amid one of the worst US housing market downturns in decades.

The housing meltdown has been exacerbated in the past nine months by a broad credit crunch which has swept through the banking sector, making it harder for Americans to obtain mortgages and credit.

A report on Friday showed that sales of existing homes, which represent a much larger wedge of the overall housing market than newly built properties, fell one percent during April from March to a seasonally-adjusted annual rate of 4.89 million properties.

"New home sales are still at a very weak level, but better-than-feared news has provided a bullish catalyst for a (stock) market coming off a bad week last week," analysts at said.

The median sales price of new houses sold in April rose 9.1 percent compared with March to 246,100 dollars, marking the highest median price level since November of last year.

The improvement in overall new home sales marked the highest level of sales since February, but sales have tumbled sharply from the market's red-hot days in late 2005 and early 2006 when over one million new homes on a seasonally-adjusted basis were being bought each month.

The ongoing housing slump started in the first half of 2006 and has been buffeting the world's largest economy despite aggressive interest rate cuts by the Federal Reserve.

A growing deluge of home foreclosures also is weighing down the market as some homeowners have failed to keep up with their mortgage repayments amid the slowing economy.

Some home builders have responded to the slump by slashing prices on new homes. Others have sought to entice potential buyers with competitive financing assistance, or by offering upgraded kitchens, flat-screen televisions and other marketing goodies.

The Commerce Department report also showed that the average sales price of a new home in April was 321,000 dollars, marking a 10 percent gain from a month earlier.

New home sales increased in most regions of the country last month.

Sales of new homes rose in the Northeast, Midwest and West of the country, but fell in the South which includes the state of Florida where property sales have fallen especially hard, partly in the wake of a construction frenzy.

Real estate agents say home sales traditionally improve during the spring and summer compared with winter months when bad weather can deter people from shopping for a new home.

Builders trimmed 1.5 percent off the glut of unsold homes to 454,000 properties, leaving them with an 10.6-month supply and not far short of March's revised 11.1 month overhang. - AFP/de

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