WASHINGTON -- Defying forecasts of an imminent slowdown, sales of new homes shot up in April to the fastest sales pace this year. But prices were up only slightly, and the backlog of unsold homes hit a new record.
The Commerce Department reported yesterday that sales of new single-family homes increased by 4.9 percent last month to a seasonally adjusted annual rate of 1.198 million units, the highest rate since last December.
Economists, who had been forecasting a sales decline in April, said the increase had been skewed by the fact that the government lowered sales activity significantly in prior months.
Also, they noted that the number of unsold homes remaining on the market at the end of April rose to the highest level on record, an overhang they predicted would depress prices going forward.
The median price of a new home sold in April was $238,500, up just 0.9 percent from a year ago, far below the double-digit price gains sellers were enjoying last year at the peak of the housing boom.
``Housing is holding up better than we had thought given how much mortgage rates have gone up, but we still expect it to weaken as the year goes forward," said David Wyss, the chief economist at Standard & Poor's in New York. Wyss said he expected home sales would drop by 10 percent this year and that construction of new homes and apartments would be down by about 8 percent.
The housing slowdown is coming after five years in which sales of both new and existing homes hit consecutive sales records as buyers enjoyed the lowest mortgage rates in four decades.
The National Association of Realtors is scheduled to report today on existing home sales, which represent four-fifths of the total home market, with expectations of a 2.5 percent decline.