New home sales rose 3.3% in April over March, the Commerce Department reporting this morning, and the median and average sales prices both posted significant gains.
New homes were selling at a seasonally adjusted rate of 526,000, according to the joint report from the Department of Housing and Urban Development and the Census Bureau. That represented a 2.4% decrease from March and a 16.9% decline from last April. Still, on a year-over-year basis, sales were off 42%.
The median price of new homes sold in April was $246,100, up 8.1% from the price originally reported in March. The average sales price was $321,000, up 9.9% from March. On a year-to-year basis, April 2008 bested the same month last year by 7.4% in median prices and 7.3% in average prices.
Carl Reichardt, managing director and senior equity research analyst at Wachovia Securities, put out a note to investors that viewed the new numbers positively but cautioned against reading too much into the increases. "We caution that one month of new home sales data does not make a trend, as these data are volatile and often revised over the three months following initial publication."
He also noted that the prices are affected by geographic and product-type mix. That view was confirmed by a 41.7% month-to-month increase in regional sales in the Northeast, where home prices are generally higher than in the South and Midwest, and an 8.3% in the West, where home prices are highest.It also is consistent with recent reports of sales increases in the Southern California region, where home prices are generally higher than elsewhere in the country.
Besides the Northeast and the West, sales in the Midwest were up 5.8% for April but down 39.7% from a year ago; and sales in the South were down 2.4% month-to-month and down 41.7% year-over-year. The Northeast, meanwhile, remained 58% below last April. The West remained down 37.8% year-over-year.
In his research note, Reichardt wrote, "While sales absorptions continue to be very weak and months' supply of inventory remains elevated, absolute total unsold inventory has declined for 13 consecutive months. We are also encouraged by the reduction in finished goods inventories, with our key demand/supply ratio indicating finished goods 'balance' for the first time in four years."
Builder stocks appeared to rally on the news, as well as the announcement that Standard Pacific had found a way to recapitalize itself with a cash infusion and stock deal worth $530 milllion with MaitlinPatterson Global Advisers LLC, which specializes in investing in troubled companies. Although an early morning stock rally had faded by early afternoon, the builder group was mostly up, with the S&P home builder ETF up 2% at $19.68 and Standard Pacific leading all gainers with a rise of nearly 50% in extremely heavy trading to $3.32 on the day.