Economy Watch: New Home Sales Up in April

By Dees Stribling, Contributing Editor

The Census Bureau reported on Thursday that new home sales were at an annualized rate of 454,000 units in April, up from 444,000 in March, which was revised upward from 417,000—an unusually strong revision. The bureau revised the February and January totals up significantly as well.

The month-over-month increase in U.S. home sales was 2.3 percent, while the year-over-year increase in April was a healthy 29 percent. The supply of houses for sale came in at 4.1 months last month, the same as in March. This, according to the bureau, points to strong demand—at least relative to supply, which has been persistently weak for types of housing since the onset of the recession.

“We’re in a cyclic recovery for housing after one of the sharpest downturns in history,” Resource Real Estate CEO Alan F. Feldman tells MHN. “Not nearly enough single-family and multifamily housing has been built in recent years even to keep up with population increase. We’ve been drastically undersupplied for the last five years, so there’s a lot of catching up to do. Still, there’s some risk at the higher end of multifamily that rent growth won’t be able to sustain its current momentum, because the high end is where most of the development is taking place.”

Stocks roiled worldwide

Equity markets worldwide had an unusually rough day on Thursday, especially Japan’s Nikkei, which dropped 7.3 percent—the largest one-day drop in more than two years. Apparently, a number of factors came together to drive Japanese shares down—such as a poor manufacturing report from China and the (supposed) hints from Ben Bernanke about slowing down QE3. On Friday, however, the Nikkei had bounced back in early trading.

Other markets were down on Thursday as well. In Asia, Hong Kong’s Hang Seng Index fell 2.5 percent, while South Korea’s Kospi Composite fell 1.2 percent. The Shanghai Composite Index dropped 1.2 percent. Later, in Europe, the British FTSE lost 1.87 percent, the German DAX was down 2.6 percent, and the French CAC 40 lost 2.45 percent.

The wave of declines came to North American markets on Thursday (after Asia and Europe), though news about housing seems to have muted the impact. The Dow Jones Industrial Average lost only 12.67 points, or 0.08 percent, while the S&P 500 was down 0.29 percent and the Nasdaq dropped 0.11 percent.

Investors also seemed happy that the U.S. Department of Labor reported on Thursday that, for the week ending May 18, initial unemployment claims were 340,000, a decrease of 23,000 from the previous week. The four-week moving average was 339,500, a decrease of 500 from the previous week.