WASHINGTON – Sales of new homes rose unexpectedly in April to the fastest pace this year as the housing sector showed resilience in the face of rising mortgage rates. But the price of homes sold last month fell and the level of unsold homes rose to a record high.
The Commerce Department reported that sales of new single-family homes increased by 4.9 percent last month to a seasonally adjusted annual rate of 1.198 million units, the highest rate since last December.
The pace of activity caught economists by surprise. They had been expecting a decline in sales, reflecting the fact that mortgage rates have been climbing in recent weeks and now stand at the highest level in nearly four years.
In other economic news, orders to U.S. factories for big-ticket manufactured goods fell in April by the largest amount in three months as aircraft orders plunged and demand for computers and other electronic products dropped by the largest amount in nearly six years.
The Commerce Department reported that demand for airplanes, appliances and other durable goods decreased by 4.8 percent last month, much larger than Wall Street had been expecting. Orders had posted strong gains of 6.6 percent in March and 3.6 percent in February.
The unexpected jump in April home sales was not likely to change the overall view that the booming housing industry is beginning to cool off after setting sales records for five straight years.
Even with the increase in the April sales pace, the median price of a new home sold in April dropped by 7.3 percent from the March level to $238,500. That represented a 0.9 percent increase over the $236,300 median sales price in April 2005, far below the double-digit price gains sellers had been enjoying during the recent sales boom.
The backlog of unsold homes rose by 2.4 percent to a new record of 565,000 homes on the market at the end of April. At the April sales pace, it would take 5.8 months to deplete that backlog.
Economists believe the slowdown in housing will be gradual as long as inflation pressures remain moderate enough to allow the Federal Reserve to soon take a pause in its two-year campaign to push interest rates higher.