New U.S. single-family home sales surged to a more than eight-year high in April and prices hit a record high, offering further evidence of a pick-up in economic growth that could allow the Federal Reserve to raises interest rates soon.
The Commerce Department said on Tuesday new home sales jumped 16.6 percent to a seasonally adjusted annual rate of619,000 units, the highest level since January 2008. The percent increase was the largest since January 1992.
March’s sales pace was revised up to 531,000 units from the previously reported 511,000 units. Economists had forecast new home sales, which account for about 10.2 percent of the housing market, rising to only a 523,000 unit-rate last month.
New home sales are volatile month-to-month and April’s increase probably exaggerates the housing market strength.
Still, last month’s gain pushed new home sales well above their first-quarter average of 531,667 units. New home sales increased in three regions, but fell in the Midwest.
The report came in the wake of fairly upbeat data on home resales and residential construction. It also added to retail sales and industrial production reports in suggesting that the economy was gathering speed after growth almost stalled in the first quarter.
Minutes from the Fed’s April 26-27 policy meeting, published on Wednesday, showed most officials considered it appropriate to raise rates in June if data continued to point to an improvement in second-quarter growth. The Fed raised its benchmark overnight interest rate in December for the first time in nearly a decade.