Hopes rise with new home sales jump

The nationwide pace of new-home sales jumped more than 16 percent in April and the inventory of unsold homes fell, according to a government report Thursday that could indicate that the housing market might be approaching a bottom, industry observers said.

Still, builders were able to boost sales only by cutting prices: The median sales price for new homes in April dropped about 11 percent from the same month last year to $229,100, according to the Commerce Department. (The median is the point at which half the homes sold for more and half for less.)

The price was 10.9 percent below the level of a year ago, the biggest year-over-year price decline since 1970.

Sales of single-family homes in April rose 16.2 percent from the previous month to a seasonally adjusted annual rate of 981,000 properties, according to the monthly report.

At the current sales rate, the supply of available homes would be exhausted in 6.5 months, down from 8.1 months in March.

The April sales figure was the biggest one-month sales gain since a 16.4 percent surge in April 1993.

Even with the increase, however, sales are 10.6 percent below the level of a year ago.

In Jackson County, a total of 184 single-family residences were sold last month, 11 more than in April 2006.

The 6.4 percent gain marked the first time since August 2005 that more homes were sold in a month compared to the same month in the previous year.

While local activity didn't match the national pace, neither did the median price fall as sharply. Countywide, April's median sales prices for existing homes declined 7.1 percent to $257,200, according to Southern Oregon Multiple Listing Service figures.

An analyst said price was the key to the national results.

"Builders are rapidly ratcheting down new-home prices to move inventory, and happily, buyers are responding to the price incentives," Wells Fargo economist Scott Anderson wrote in a research note.

"On balance, this report supports our view that home sales are nearing a bottom," he wrote, "and the adjustments in the housing market going forward are going to be centered more on home price declines than in further declines in sales and starts."

But Anderson noted that a move up in mortgage rates this month could keep a lid on sales growth.

On a regional basis, the South reported the biggest sales increase at 27.8 percent.

Sales grew 8.5 percent in the West and 3.8 percent in the Northeast.

The Midwest was the only region to post a decline, with sales falling 4 percent.

David Seiders, chief economist for the National Association of Home Builders, said he was looking for sales of new homes to fall by 18 percent for the whole year, matching last year's decline.

Sales of both new and existing homes set records for five consecutive years until 2006, when real estate suffered what many believe was a bursting of a speculative bubble.

The association's confidence survey for home builders returned in May to the low point for this downturn, set last September. Builders have grown more worried that tightened lending standards in the wake of rising defaults, especially for subprime mortgages, will further weaken demand in coming months.

In other economic news, the Commerce Department said orders to U.S. factories for big-ticket manufactured goods posted a moderate 0.6 percent increase in April. A continued rebound in business investment offset weakness in orders for commercial airplanes and autos.

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