Sales of new homes hit highest level since 2008

New home sales surged 16.6 percent in April to the highest sales pace since January 2008, a good sign for the spring buying season even as inventory remains constrained. 

Sales rose last month to a seasonally adjusted annual rate of 619,000 units, up from 531,000 in March and a jump of 23.8 percent above the April 2015 estimate of 500,000, the Commerce Department reported on Tuesday.

{mosads}”Rising home sales combined with tight inventory will translate into increased housing production as we move onward in 2016, especially as job creation continues and mortgage rates remain low,” said Robert Dietz, chief economist with the National Association of Home Builders (NAHB). 

The seasonally adjusted estimate of new houses for sale at the end of April was 243,000, only a supply of 4.7 months at the current sales rate and down from 5.5 months in March.

“The gain reflects a sharp increase in demand from homebuyers and a healthy U.S. economy, and should put to rest fears of an oncoming recession,” said Ralph McLaughlin, chief economist with Trulia.

The median sales price of new houses sold in April was $321,100 while the average sales price was $379,800.

Jonathan Smoke, chief economist at realtor.com, said that “at last we have a clear, statistically significant view that the new home market is having its best spring buying season in a decade.”

Regionally, new home sales rose by 52.8 percent in the Northeast, 18.8 percent in the West and 15.8 percent in the South. Sales fell by 4.8 percent in the Midwest.

“Builders remain optimistic about the housing market, and this month’s jump in new home sales is a positive sign that growing demand will keep the housing sector on an upward trajectory through the spring buying season,” said NAHB Chairman Ed Brady, a home builder and developer from Bloomington, Ill.