[WASHINGTON] New US single-family home sales rose more than expected in April and the median price surged, suggesting the housing market recovery was gaining traction.
The Commerce Department said on Tuesday sales increased 6.8 per cent to a seasonally adjusted annual rate of 517,000 units. March's sales pace was revised up to 484,000 units from the previously reported 481,000 units.
Economists polled by Reuters had forecast new home sales, which account for 9.3 per cent of the market, rising to a 510,000-unit pace last month.
The upbeat report added to housing starts data in indicating that housing was gaining momentum after treading water for much of last year. Economists believe housing will take the baton from a lethargic manufacturing sector and help to drive economic growth this year.
Housing is being buoyed by a strengthening jobs market, which is encouraging young adults to set up their own households.
New homes sales jumped 36.8 per cent in the Midwest to a seven-year high and increased 5.8 per cent in the South. Sales fell 5.6 per cent in the Northeast and slipped 2.3 per cent in the West.
The stock of new houses available on the market rose 0.5 per cent last month to 205,000. Supply still remains less than half of what it was at the height of the housing boom, good news for home builders who will need to ramp up construction.
At April sales pace it would take 4.8 months to clear the supply of houses on the market, down from 5.1 months in March.
With supply still tight, the median price for a new home rose 8.3 per cent from a year ago to US$297,300. While higher home prices could reduce affordability, they boost household equity, which could boost consumer spending.