Biggest monthly drop in 10 years in April as sales sink 11.8 percent from record.
May 26, 2004: 10:32 AM EDT
NEW YORK (CNN/Money) - New home sales posted the biggest monthly drop in 10 years in April, coming in much weaker than Wall Street economists had expected.
The Commerce Department said new home sales fell to an annual rate of 1.09 million last month, down 11.8 percent from the revised record high rate of nearly 1.24 million in March, when mortgage rates were near a 40-year low.
Economists surveyed by Briefing.com had forecast that sales would fall to an annual rate of about 1.2 million.
The sharp drop was a surprise because even with mortgage rates starting to climb last month, analysts expected many people waiting to buy would rush to do so before rates rose further.
And a separate report Tuesday showed that existing home sales rose to near record levels last month, bucking forecasts of a modest decline.
The drop in new home sales helped take the inventory of new houses up to an estimated 4.3 months supply, the largest since February of 2003.
But it was not enough to hit prices for new homes.
The median price, with half of all new homes costing less and half costing more, jumped 8.8 percent from March to a record $221,200, the department said in its report, while the average price rose 4.9 percent to $270,400, also a record.
Prices are up about 16 percent from April 2003.
An earlier government report showed housing starts slipped in April, but much of that decline came from a drop in construction of apartment buildings, with single-family home starts basically unchanged.
Building permits, a measure of builder's confidence in the market, increased in April.
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