New home sales surge 14.8% in April
* New home sales surged another 14.8% in April after jumping 29.9% in March. That pushed the seasonally adjusted annual rate to 504,000 from an upwardly revised 439,000 in March. Analysts were looking for a sales rate of 425,000. Sales haven't been this strong since May 2008.
* Regionally, sales flat-lined in the Northeast. But they rose 10.8% in the South, jumped 21.7% in the West and surged 31.6% in the Midwest.
* The raw number of homes for sales dropped to 211,000 from 227,000 in March. That's the lowest level going all the way back to October 1968. Compared with a year earlier, inventory was off 29.7%. The months supply at current sales pace indicator of inventory dropped to 5 from 6.2. That's the tightest reading since December 2005, right after the peak of the housing bubble.
* Median prices tanked 9.7% to $198,400 from $219,600 in March. On a year-over-year basis, prices were off 9.5% to their lowest level since December 2003.
The new home market rocked and rolled again in April, driven by the looming expiration of the tax credit and cheap, cheap home prices. Sales rose to their highest level in almost two years, while the supply of homes on the market plunged to a level we haven't seen since the year before Neil Armstrong and Buzz Aldrin landed on the moon! At the same time, the median price of a new home plunged almost 10% to the lowest point in more than six years.
Clearly, government handouts have had their desired effect. They juiced home sales and helped builders clear out even more inventory. That would typically set the stage for a vigorous rebound in home construction and hiring ... except for one problem. The "used" home market is still oversupplied, and will remain that way for some time thanks to a continuing influx of distressed and foreclosed property. We're also going to see yet another "hangover" in the coming couple of months due to the tax credit's expiration, with sales rates dropping off.
Bottom line: I don't expect a vigorous rebound in housing. But I don't expect a renewed collapse, either. Instead we'll just bounce around the bottom for several quarters until all that inventory is burned off. If you want excitement, watch the Stanley Cup finals!