Purchases of new homes in the United States rose in April for the second time in three months as lower prices and cheaper financing stabilized demand.
Sales increased 0.3%, to an annual pace of 352,000, lower than forecast, after a 351,000 rate in March, the Commerce Department said Thursday. The median sales price fell 15% from April 2008, while the number of homes on the market fell to the lowest level in almost eight years.
Near-record-low mortgage rates, bargain pricing and tax credits for first-time buyers are helping to put a floor under purchases after almost four years of declines. Still, rising unemployment and tight credit indicate sales will not rebound much in coming months, even with the worst recession in half a century beginning to ease.
"The good news is probably the continued improvement in inventory levels," said Adam York, a Wachovia Corp. economist. "We'll take the improvement in the new-home market as a sign we're getting closer to the bottom."
New-home sales were projected to rise 1.1%, to an annual rate of 360,000, according to the median estimate in a Bloomberg survey.
The median price of a new home decreased to $209,700 from $246,400 in April 2008.
Sales of new homes fell 34% from April 2008. They hit a record-low of 329,000 in January.
Builders had 297,000 houses on the market last month, down 4.2% from March and the fewest since May 2001. With the decline, it would take 10.1 months to sell all homes at the current sales pace, the lowest level since July.
April's sales gain was led by a 1.9% increase in the South. Purchases fell 3.8% in the West and were little changed in the Northeast and Midwest.
Other housing data in recent weeks has pointed to stability. A report the National Association of Realtors released Wednesday showed purchases of existing homes in April rose for the second time in three months, by 2.9%, to an annual rate of 4.68 million.
Home builders' confidence climbed to an eight-month high in May. Applications to purchase homes are also up 9% from February's nine-year low.
Tax credits of $8,000 for first-time homebuyers, and near-record-low borrowing costs after Federal Reserve Board efforts to drive down rates, are helping to make buying more affordable.
Rates on 30-year fixed loans fell to 4.78% in April, the lowest level since Freddie Mac began keeping records in 1972.
Record foreclosures have drawn buyers to the existing-home market. Purchases of distressed properties accounted for almost half of all sales in recent months, according to the Realtor group.
New-home sales now make up about 7% of the total market, down from about 16% at the peak of the housing boom in 2005.
"Prospective new-home buyers are likely to find better values" in existing and foreclosed properties, said Zach Pandl, an economist at Nomura Securities International Inc.