US home sales hit 2-year high

City A.M. Reporter
SALES of newly built US single-family homes rose faster than expected in April to their highest level in nearly two years, government data showed yesterday, as buyers signed contracts to benefit from a popular government tax credit.

The Commerce Department said sales jumped 14.8 per cent to a 504,000 unit annual rate, the highest since May 2008, from an upwardly revised 439,000 units in March. It was the second straight month that new home sales rose. Analysts polled by Reuters had expected new home sales to increase to a 430,000 unit annual pace from March’s previously reported 411,000 units.

Buyers had to sign contracts by 30 April and close on the home by the end of June to qualify for the federal tax credit.

New home sales are measured at contract signing and analysts believe buying activity will temporarily ebb in May. However, they expect sales to pick up toward year-end as the economic and labor market recovery gain more vigor.

Data on Monday also showed the tax credit spurred sales of previously owned homes, which are recorded at contract closing, to a five-month high in April. Existing home sales are expected to rise through June when the tax credit ends.

Despite the jump in sales, the median sale price for a new home dropped a record 9.7 per cent from March to $198,400, the lowest since December 2003, the Commerce Department said.