BUSINESS
05/25/2011 10:32 EDT | Updated 07/25/2011 05:12 EDT

New Home Sales In U.S. Rise In April

(CBC) -- New home sales in the U.S. rose 7.3 per cent in April, the Commerce Department reported Tuesday, but the pace remained far below that which would represent a healthy housing market.

The department said sales rose to an adjusted annual rate of 323,000 homes, the second gain in as many months, but still just 16 per cent above the record low of two months ago. A healthy rate would be 700,000.

The U.S. housing market's recovery from the mortgage and financial crisis of 2008 remains constrained by high unemployment, tight credit conditions and fears of further price falls.

"Plus there is that constant battle with the resale market where inventories are still very high," BMO Capital Markets economist Jennifer Lee said in a commentary.

"So while an unexpected jump is good news, there is still a long way to go before the sector becomes 'normal' or 'healthy,'" said Lee.

On the positive side, sales rose in all four regions of the country, and builders drew down more of their inventories. Inventories fell for the 48th straight month and, at 175,000, are the lowest since 1963, as far back as records go.

The supply of new homes is down to 6.5 months, which is considered normal and the lowest in just over one year. At the same time, prices rose 1.6 per cent, the first gain in four months.

Last year, Americans bought the fewest homes on records going back 47 years.