New home sales in the United States defied expectations in April to reach a one-year high, the Commerce Department said Tuesday, fueled by increases in the south and the Midwest.
"The rebound in new home sales largely reflects a shift in demand away from the existing home market, due to the chronic lack of supply," Pantheon Macronomics' Senior US Economist Kieran Clancy wrote in a note to clients shortly after the figures were announced.
Sales of new single-family houses rose by almost 12 percent from last April to reach a seasonally-adjusted annual rate of 683,000 last month, the Commerce Department said in a statement.
They also rose on a monthly basis following a downward revision to March's sales figures.
The figure for April were was slightly above the median expectation of economists surveyed by MarketWatch, who had been predicting an annual rate of 669,000.
New home sales cratered in the northeast in April, but were offset by a sharp increase in the south and Midwest, where sales rose by 17.8 and 11.8 percent respectively, month-on-month.
The median sales price of new houses sold in April fell from a month earlier to $420,800, its lowest level since December 2021.
The property sector -- which is sensitive to interest rates -- has been hit by the Federal Reserve's rapid cycle of hikes since early 2022 as it looks to bring down above-target inflation.
"Despite constraints from higher mortgage rates that are impacting affordability, new home sales have shown some positive momentum in recent months," High Frequency Economics' Chief US Economist Rubeela Farooqi wrote in a note to clients.
The new homes market is much smaller than that of existing homes, which slowed for a second straight month in April as consumers grappled with the cost of higher interest rates on mortgages.
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