US new-home sales post surprise gain in sign of stability

Washington

NEW-home sales in the US unexpectedly increased in April after swooning a month earlier, suggesting the housing market is starting to stabilise.

Purchases of single-family houses climbed 0.6 per cent from March to a 623,000 annualised pace, government data showed on Tuesday.

The median forecast in a Bloomberg survey of economists called for a drop to a 480,000 rate of sales.

The median sale price fell 8.6 per cent from a year earlier to US$309,900.

The numbers gave a boost to the stocks of US homebuilders, which have rebounded in recent weeks. An S&P index tracking the industry had gained 19 per cent in May through Friday.

Mortgage rates near historic lows may be putting a floor under the housing market, even as soaring unemployment and tighter credit standards threaten to complicate the recovery.

"We're still trying to understand what is the new normal," said Alex Barron, an analyst with the Housing Research Centre in El Paso, Texas.

"Is it sales down 20 per cent from the 2019 level or down 40 per cent?"

The slight gain in April came after sales dropped the most in almost seven years in March, when much of the US economy shut down to stem the spread of coronavirus. BLOOMBERG