WASHINGTON - U.S. new-home sales fell in April to their lowest level in five months, a sign that six Federal Reserve interest-rate increases in the past year may be slowing the economy.
Sales for the month declined 5.8%, to an annual rate of 909,000 units, after rising 5.8% in March. The biggest slumps were in midwestern and western states, the Commerce Department said Wednesday.
Chicago-area purchasing managers reported Wednesday that their factory index fell in May, and the Conference Board's index of leading economic indicators dropped in April for the second time in three months.
"The numbers reflect a little softer economy in the second quarter," said Gary Thayer, chief economist at A.G. Edwards & Sons in St. Louis. "It suggests that what the Fed's doing to cool the economy may be achieving some results."
Mortgage rates have been rising since the Fed started boosting borrowing costs in June 1999. The average rate on a one-year adjustable-rate mortgage rose last week to 7.25%, the highest level in more than nine years.
The manufacturing index of the National Association of Purchasing Washington Management-Chicago fell to 53.9 in May - the lowest since September - from April's 56.5 reading. An index of prices paid for raw materials declined to 64.4 in May, from 69.4 in April.
The annual rate of home sales in April was the lowest since 895,000 units in November. The monthly decline was the largest since a 7.2% decrease in September. March's sales were the strongest since a 995,000-unit pace in November 1998.
The biggest declines in April by region were those of 15.5% in the Midwest and 11.5% in the West. Sales rose in the Northeast and were flat in the South.
The median price of a new home fell 2.2%, to $161,400, in April - the lowest since October's $160,000.