The Commerce Department said sales increased 7.3 percent to a seasonally adjusted annual rate of 323,000 units, the highest level since December, while prices also rose. Economists had expected a 300,000-unit rate.
All four regions recorded gains in sales, with the West reporting a 15.1 percent rise. Compared with April last year, however, sales were down 23.1 percent.
“Although the headline figure has moved sharply on a month-to-month basis, reflecting in part the impact of harsh weather in earlier months, the bottom line is that the new-home market continues to bounce along the bottom,” said Omair Sharif, an economist at RBS in Stamford, Conn.
An oversupply of used houses and a relentless wave of foreclosed properties are curbing the market for new homes, even as builders are keeping lean inventories.
A record low 175,000 new homes were available for sale last month, down 2.8 percent from the previous month.
Data last week showed a steep drop in new home construction in April and a decline in sales of previously owned homes.
“There’s still a tremendous overhang in the housing market, and while new-home sales are starting to percolate, that doesn’t change the fact that we still have such huge inventory,” said Michael Yoshikami, chief investment strategist at Ycmnet Advisors in Walnut Creek, Calif.
While the report cast a positive light on the housing market, it did little to change perceptions that the economy remained mired in a soft patch.
That view was reinforced by a Richmond Federal Reserve survey showing that manufacturing activity in the central Atlantic region stalled in May, after expanding during the previous seven months.
The Richmond Fed’s manufacturing index came in at minus 6, a contraction from the reading of plus 10 in April, dragged down by declines in shipments and new orders. A negative number indicates contraction.
The Commerce Department report also showed that the median sales price for a new home rose 1.6 percent last month to $217,900. Compared with April last year, the median price increased 4.6 percent.
At April’s sales pace, the supply of new homes on the market dropped to 6.5 months’ worth, the lowest since April last year, from 7.2 months’ worth in March.
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