New home sales rise, but housing market likely to slow

WASHINGTON - Americans bought more new homes in April than they had in the previous two months, but sales are slowing from their pace a year ago.

The Commerce Department says sales of new homes rose 6.4 percent last month to a seasonally adjusted annual rate of 433,000, slightly above the level that economists had forecast. That compares with a revised annual pace of 407,000 in March, when purchases fell 6.9 percent. Buying had dropped 4.4 percent in February, in part because of snowstorms.

April sales surged in the Midwest and edged up in the South. Home-buying was flat in the West and fell in the Northeast.

New-home sales have declined 4.2 percent over the past 12 months. The median sales price fell a slight 2.1 percent during the past month to $275,800, the largest year-over-year decline since June of 2012. The average sale price for a new home was was $320,100.

Economist Ian Shepherdson of Pantheon Macroeconomics expect housing sales are likely to decline as interest rates rise this year. "We think home sales will be broadly flat for the next few months but will drop again as rates rise later this year," he said in a client note.

Although data on new home sales can jump around from month to month, the latest figures are consistent with other indicators suggesting that the housing sector is slowing down. A National Association of Home Builders Survey last week showed a lackluster pace of home construction this year.

If the real estate sector isn't as strong as it was last year, it isn't about to fall off a cliff. Sales of existing homes rose in April for only the second time in nine months. Home prices are also rising less quickly than they have over the last several years, which is helping to keep residential real estate fairly affordable in much of the U.S.