WASHINGTON -- Sales of new U.S. single-family homes rose more than expected in April and the stock of houses on the market hit a 3½ year high, further signs the sputtering housing recovery may be close to picking up.
The Commerce Department said Friday sales increased 6.4 percent to a seasonally adjusted annual rate of 433,000 units, ending two straight months of declines.
"We are not getting a snapback so far this spring. It's just a modest improvement from the harsh winter. The trend is still soft," said Michelle Meyer, senior economist at Bank of America Merrill Lynch (BAC) in New York.
Economists had forecast new home sales at a 425,000-unit pace last month. Homebuilder shares rallied on the report. Lennar (LEN) rose 2.2 percent and D.R. Horton (DHI), gained 2 percent.
Compared to April last year, sales were down 4.2 percent.
A run-up in mortgage rates last year and rising home prices, which have outpaced wage growth, are weighing on housing. Home sales are also being hampered by a shortage of properties.
The slump, which started in the second half of last year, has caught the attention of the Federal Reserve, which is scaling back the amount of money it pumping into the economy through monthly bond purchases.
Officials viewed a range of factors, including "higher home prices, construction bottlenecks stemming from a scarcity of labor and harsh winter weather, input cost pressures, or a shortage in the supply of available lots" as hurting activity.
%VIRTUAL-article-sponsoredlinks%But there are signs a turnaround is imminent.
Sales of previously owned homes increased in April and the inventory of houses was the highest in nearly two years, a report showed on Thursday.
According to Freddie Mac, the fixed 30-year mortgage rate fell to an average of 4.14 percent this week, a near seven-month low, from an average of 4.20 percent the prior week. That should help to improve affordability.
Last month, new home sales jumped in the Midwest to their highest level since November 2007. Sales also rose in the South, but were flat in the West. In the Northeast, sales recorded their largest decline since October 2012.
The inventory of new houses on the market increased 0.5 percent to 192,000 units, the highest level since November 2010. While the stock of new houses on the market has come off a record low hit in July 2012, it remains less than half of its pre-recession level.
At April's sales pace it would take 5.3 months to clear the supply of houses on the market, down from 5.6 months in March. With inventories improving, the median price of a new home last month fell 1.3 percent to $275,800 from April last year.
-Additional reporting by Richard Leong in New York.
House Rich: Neighborhoods With the Biggest Price Jumps
New Home Sales Rebound, Inventories Hit a 3½-Year High
Year-over-year gain: 21.5%
Median sale price, Jan. 2013: $224,450
Median sale price, Jan. 2014: $272,750
Residents enjoy hundreds of nearby hiking trails, as well as indoor culture at the Fine Arts Center and the Colorado Springs Philharmonic.
Year-over-year gain: 22%
Median sale price, Jan. 2013: $318,375
Median sale price, Jan. 2014: $388,500
This neighborhood, bounded by the Schuylkill River and 20th Street, and by South Street and Christian Street, was viewed as a slum in the 1970s, when Philadelphia's Redevelopment Authority took over abandoned properties.
Year-over-year gain: 24.2%
Median sale price, Jan. 2013: $516,450
Median sale price, Jan. 2014: $641,500
Magnolia covers 4 square miles, making it the second-largest Seattle neighborhood by area. It features a lighthouse built in 1881 and is home to Seattle's largest park, at 534 acres.
Year-over-year gain: 32.1%
Median sale price, Jan. 2013: $210,446
Median sale price, Jan. 2014: $277,898
Paradise Valley, in the heart of the Scottsdale-Phoenix area, gets an average 294 days of sunshine a year -- hence, the more than 200 golf courses.
Year-over-year gain: 32.2%
Median sale price, Jan. 2013: $344,750
Median sale price, Jan. 2014: $455,835
The Washington Post listed Sunset Hills among "the shortest commute" category of Virginia neighborhoods, with an average commute time of just over 21 minutes. And Dulles International Airport is about six miles away.
Year-over-year gain: 44.5%
Median sale price, Jan. 2013: $247,735
Median sale price, Jan. 2014: $357,900
This once-seedy area has become hot in recent years. It's packed with art galleries and chic retail shops, as well as new upscale bars and restaurants next to venerable family-owned cafeterias.
Year-over-year gain: 46.9%
Median sale price, Jan. 2013: $284,750
Median sale price, Jan. 2014: $418,250
Brighton, once the center of New England's cattle trade, is in the northwest corner of Boston, on the Charles River. The Brighton Branch Library is Boston's first renovated LEED Green Building. The Brighton Police station is shown here.
Year-over-year gain: 47.5%
Median sale price, Jan. 2013: $223,175
Median sale price, Jan. 2014: $329,100
South Loop joins a number of other once-blighted neighborhoods on this list that have been redeveloped and are now hot. The site of former rail yards, it was known for many years more for its vices (as in brothels, burlesques) than its residential virtues.
Year-over-year gain: 48.7%
Median sale price, Jan. 2013: $241,000
Median sale price, Jan. 2014: $358,450
Also: Fairgrounds, San Jose (41.4%); La Jolla, San Diego (40%); Woodland Hills, Los Angeles (37.5%); Southwest Anaheim, Anaheim (35.2%); Berryessa, San Jose (34.4%).
Newhall, the southernmost and oldest district of Santa Clarita, was the first permanent Anglo settlement in the valley. Ranches-turned-film studios dot the area, including the Melody Ranch, which was once owned by Gene Autry. The ranch hosts the annual Santa Clarita Cowboy Festival.
Year-over-year gain: 48.8%
Median sale price, Jan. 2013: $504,250
Median sale price, Jan. 2014: $750,275
This is the most affluent neighborhood in Charlotte; the median income is $79,737, according to Zillow. That compares with a median of $46,975 for Charlotte. A high point of the area is the Duke Mansion, built in 1915 by tobacco magnate James Buchanan Duke.
Year-over-year gain: 57.4%
Median sale price, Jan. 2013: $167,450
Median sale price, Jan. 2014: $263,615
People who live here, according to classifications Zillow uses to characterize residents, are likely to be: Corporate Climbers, Multi-lingual Urbanites or in a category called "Bright Lights, Big City," which Zillow uses to describe "singles ranging in age from the early 20s to mid-40s who have moved to an urban setting."
Year-over-year gain: 97.3%
Median sale price, Jan. 2013: $668,250
Median sale price, Jan. 2014: $1,318,301
New York City’s 92-acre planned community includes areas built on more than 3 million cubic yards of soil and rock, some of which was excavated during the construction of the World Trade Center.
Bloomberg ranked neighborhoods in U.S. cities based on the year-over-year increase in median home sale prices from January 2013 to January 2014. Percentage increases were based on Zillow calculations of median sale prices of all home types and calculated only for neighborhoods with at least 10 sales per month. Only neighborhoods with median home sale prices of at least $250,000 in January 2014 were included. Data were rounded.