New-home sales fell sharply in April, a potential sign of weakening in the market at a time of rising prices and limited inventories.
Purchases of new, single-family homes, which account for a narrow slice of all U.S. home sales, decreased to a seasonally adjusted annual rate of 569,000 in April, down 11.4% from March, the Commerce Department said Tuesday.
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The data have a margin of error of 10.5%, and the overall trend remains one of continuing improvement in the market. Before last month, sales had risen for three-consecutive months.
New-home construction has lagged throughout much of the housing market's five-year recovery, but there have been recent signs of a resurgence in the starter-home segment. Builders say they are stepping up construction at the lower end, and the share of first-time buyers in the market is increasing.
The National Association of Realtors on Wednesday is scheduled to report sales of existing homes, which account for the bulk of the market.
The housing market is at or near 10-year highs for newly built and previously owned homes, and economists said momentum is likely to continue throughout the year despite last month's dip.
"The trend in sales for both [new and existing homes] is clearly up, and up for good reasons. The job numbers are solid, wages appear to be picking up a bit of steam, and mortgage rates haven't moved up much," said David Berson, chief economist at Nationwide Insurance.
The median sale price for a new home fell in April from a year earlier to $309,200, indicating builders are shifting attention toward starter-home buyers.
The U.S. housing market picked up steam toward the end of 2016, momentum that carried into the early months of this year.
New-home construction declined modestly in April for the third time in four months. The slowdown in starts is likely to exacerbate an imbalance of supply and demand in the market. Home sales hit their strongest pace in a decade in the first quarter, the National Association of Realtors said last week.
"We are on a slow and steady upward trajectory and that's good news both for those in the industry, but also more important for homeowners who have been stymied by low inventory," said Ralph McLaughlin, chief economist at Trulia.
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(END) Dow Jones Newswires
May 23, 2017 11:17 ET (15:17 GMT)