Sales of new single-family homes are rebounding with a 6.4% increase in April to an adjusted annual rate of 433,000 units, according to the Commerce Department reports. This is the first upswing in new-home sales following two consecutive months of decline.
Builders are showing signs of increasing their inventories of homes for sale. New-home inventories reached a three-and-half-year high in April, with 5.3 month supply at the current sales pace. Still, the stock of new houses for sale remains more than 50 percent below its pre-recession level.
“Builders are adding inventory in anticipation of further release of pent-up-demand,” says David Crowe, chief economist for the National Association of Home Builders. “We are only about halfway back to what could be considered normal market, but relatively low mortgage rates and affordable home prices are other factors that should help keep starts and sales on a slow trajectory in the months ahead.”
With rising inventories, the median price of new home dropped 1.3 percent in April compared to a year ago, averaging $275,800 nationwide.
Regionally, new-home sales rose the most in the Midwest by 47.4 percent in April compared to March. Followed by a 3.1 percent gain in the South and the West held steady and the Northeast posted a 26.7 percent drop.
Builders are gradually increasing sales, but tight credit for first-time home buyers are impeding a more robust recovery.