WASHINGTON - New single-family home sales rose unexpectedly in April to notch their second straight month of gains and prices increased, offering some hope for the stagnant housing market.
The Commerce Department said sales increased 7.3 percent to a seasonally adjusted 323,000 unit annual rate, the highest level since December, from a slightly upwardly revised 301,000-unit pace in March.
Economists polled by Reuters had forecast new home sales unchanged at a previously reported 300,000-unit rate. All four regions recorded gains in sales, with the West reporting a 15.1 percent rise.
However, compared to April last year sales were down 23.1 percent.
"It suggests maybe we're beginning to see some signs of stabilization in housing, but it's too early to say we've bottomed out," said Gary Thayer, chief macro strategist at Wells Fargo Advisors in St. Louis, Missouri
While the report cast a positive light on the housing market, it did little to change perceptions the economy remained mired in a soft patch.
Data ranging so far ranging from retail sales to industrial production have painted a picture of an economy struggling to regain momentum as the second quarter started, with employment only the bright spot.
Manufacturing activity in the central Atlantic region paused in May, after expanding during the previous seven months, according to the Richmond Fed's latest survey, released on Tuesday.
The government is expected to report on Thursday that the economy grew at an annual 2.1 percent rate in the first quarter, according to a Reuters survey, rather than the 1.8 percent pace it estimated last month.
LOTS OF HOMES FOR SALE
"There's still a tremendous overhang in the housing market, and while new home sales are starting to percolate, that doesn't change the fact that we still have such huge inventory," said Michael Yoshikami, chief investment strategist at Ycmnet Advisors in Walnut Creek, California.
An oversupply of used houses and a relentless wave of foreclosed properties are curbing the market for new homes, even as builders are keeping lean inventories.
There were a record low 175,000 new homes available for sale last month, down 2.8 percent from the prior month. Data last week showed a steep drop in new home construction in April and a dip in sales of previously owned homes.
The Commerce Department report the median sales price for a new home rose 1.6 percent last month to $217,900. Compared with April last year, the median price increased 4.6 percent.
At April's sales pace, the supply of new homes on the market dropped to 6.5 months' worth, the lowest since April last year, from 7.2 months' worth in March.
(Reporting by Lucia Mutikani; Editing by Neil Stempleman)
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