Finally, Some Good News: New home sales at 4-month high, supply drops

by 24 May 2011
WASHINGTON (Reuters) - 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.


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