New Home Sales Hit 2-Year High; Prices At Lowest Since 2003

In not-so-depressing news about the economy, the Commerce Dept. announced this morning that sales of new homes in April had jumped up 14.8% from March — the highest level in nearly two years.

But before you break out the trombone to start playing “Happy Days Are Here Again,” it’s believed that the bump in new home sales was the result of buyers needing to sign contracts by April 30 in order to take advantage of a federal tax credit.

Here’s how some analyst guy explains it to Reuters:

That is a big number, but my sense is that while this is great news, we’re drawing last-minute incentive sales from the future… We’ll probably see a few months of soft patches to make up for this.

In order to qualify for the credit, contracts needed to be inked by April 30 and closing has to happen by the end of June.

However, points out Reuters, the demand for loans to buy homes was still at a 13-year low as of last week, while mortgage applications to refinance home loans hit a seven-month high as rates neared record lows.

And while there was a spike in new home sales in April, the median sale price for a new home dropped to $198,400 — down 9.7% from the previous month and the lowest since Dec. 2003.

New home sales at 2-year high [Reuters]