Sales of newly built single-family homes rose faster than expected in April to their highest level in nearly two years, government data showed on Wednesday, as buyers signed contracts to benefit from a popular government tax credit.
The Commerce Department said sales jumped 14.8 percent to a 504,000 unit annual rate, the highest since May 2008, from an upwardly revised 439,000 units in March. It was the second straight month that new home sales rose.
Analysts polled by Reuters had expected new home sales to increase to a 430,000 unit annual pace from March's previously reported 411,000 units.
Buyers had to sign contracts by April 30 and close on the home by the end of June to qualify for the federal tax credit.
New home sales are measured at contract signing and analysts believe buying activity will temporarily ebb in May. However, they expect sales to pick up toward year-end as the economic and labor market recovery gain more vigor.
Data on Monday also showed the tax credit spurred sales of previously owned homes, which are recorded at contract closing, to a five-month high in April. Existing home sales are expected to rise through June when the tax credit ends.
Despite the jump in sales, the median sale price for a new home dropped a record 9.7percent from March to $198,400, the lowest since December 2003, the Commerce Department said. In the 12 months to April, the median sale price declined 9.5 percent.
The number of new homes on the market fell a record 7 percent to 211,000 units in April, the lowest since October 1968. Last month's sales pace left the supply of homes available for sale at 5.0 months' worth, the lowest since December 2005, from 6.2 months 'worth in March.