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Sales of new homes rose 3.3 percent in April

?AP Economics Writer

WASHINGTON (AP) – Americans bought more new homes last month, the latest evidence that the U.S. housing market could be starting to recover.

New-home sales increased 3.3 percent in April from March to a seasonally adjusted annual rate of 343,000, the Commerce Department reported Wednesday. Sales rose sharply in every region of the country but the South.

The gain pushed the sales pace to its second-highest level in two years. Economists were encouraged by the increase by cautioned that new homes are still selling at half the rate consistent with healthy markets.

The increase follows other reports this week that suggest steady improvement in housing. Sales of previously occupied homes rose to near a two-year high in April. A key builder of luxury homes reported that it returned to profitability in the second quarter.

Jeff Raymond (left), with Ari-Tex Electric Inc., prepares to install lighting in a Hawkins-Welwood Homes townhome site May 16 in Plano, Texas. New-home sales increased 3.3 percent in April from March to a seasonally adjusted annual rate of 343,000. (AP Photo/Tony Gutierrez)

A pickup in hiring, cheaper mortgages and lower home prices in most markets have made home buying more attractive.

Ellen Zentner, a senior economist at Nomura Securities, said home construction would likely contribute to overall economic growth this year for the first time since 2005.

“Housing could be a pleasant surprise this year,” Zentner said.

Sales of new homes rose 28 percent in the Midwest and the West, and 7.7 percent in the Northeast. Only in the South did sales fall, by 10.6 percent.

The median price rose to $235,700, a slight increase from March.

Separately, U.S. homebuilder Toll Brothers said home deliveries and signed contracts on new homes rose in its latest quarter. Its shares rose more than 2 percent.

The luxury homebuilder earned $16.9 million for the three months ended April 30. A year earlier it lost $20.8 million.

On Tuesday, the National Association of Realtors said sales of previously owned homes increased 3.4 percent to a seasonally adjusted annual rate of 4.62 million. That nearly matched January’s sales pace of 4.63 million, which had been the best in two years.

Though new homes represent less than 20 percent of the housing market, they have an outsize impact on the economy. Each home built creates an average of three jobs for a year and generates about $90,000 in tax revenue, according to statistics compiled by the National Association of Home Builders.

Builders have grown more confident since last fall, in part because more people are expressing interest in buying a home. In May, builder optimism rose to the highest level in five years, according to a monthly index compiled by the builders’ group.

Homebuilders reported improving sales and higher traffic from prospective buyers, the survey showed. A gauge measuring confidence in sales over the next six months also increased.

Recent job gains have likely made it easier for more Americans to purchase a home. Employers have added 1 million jobs in the past five months. And unemployment has dropped a full percentage point since August, from 9.1 percent to 8.1 percent in April.

Mortgage rates, meanwhile, have fallen to record lows, making home-buying more affordable. Still, many would-be buyers are having difficulty qualifying for home loans or can’t afford larger down payments required by banks.

Builders still face a tough environment. They are struggling to compete with deeply discounted foreclosures and short sales – when lenders allow homes to be sold for less than what’s owed on the mortgage.

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