Sales of new single-family homes leaped 22.7 percent in April to the fastest pace in more than six years, the government reported Wednesday, as the housing market rebounded from winter storms that had dampened buying enthusiasm.
The increase was far above expectations and reflected the arrival of spring after a March blizzard.
April’s increase followed a revised 1.5 percent rise in March to a seasonally adjusted annual rate of 612,000. The March rise previously was reported as 4.8 percent.
The biggest rise in April sales of new homes was in the
Northeast, where they skyrocketed 101.8 percent. Sales in the Northeast rose to a seasonally adjusted annual rate of 111,000, the highest level since January 1989, when it was 125,000, the spokesman said.
Not all analysts, however, were willing to say that the solid housing rebound means the nation’s economy is booming back to robust health.
“It was a very good number,” says Marilyn Schaja, money market economist at Donaldson, Lufkin & Jenrette Securities Corp. “But people shouldn’t expect that housing sales are going to stay at this level in the months ahead.”
Another report Wednesday gave a less optimistic picture of the economic recovery. The government’s chief forecasting gauge edged a paltry 0.1 percent higher in April, signaling sluggish growth ahead.
The meager increase in the Commerce Department’s index of leading indicators, after a 1 percent plunge in March, surprised economists, who were expecting a 0.3 percent or 0.4 percent gain.
“There are pockets of strength that are barely able to compensate for areas of weakness,” said economist Samuel Kahan of Fuji Securities Inc. in Chicago.
Kahan and other anapick up from the anelysts expect growth will mic 0.9 percent annual rate of the first three months of the year. But they believe it will fall far short of the robust 4.7 percent rate of the fourth quarter and won’t generate much improvement in the nation’s jobless rate, which has been stuck at 7 percent since February.
“The unemployment rate will drift slowly, very slowly, downward,” Kahan said.
The leading index is designed to predict economic activity six to nine months in advance. Three consecutive monthly movements in one direction, up or down, are considered a sign of whether the economy will be expanding or
contracting.
Lately, the index has 1.7 percent in Decembeen in an up and ber, the largest in nearly down pattern. It soared 10 years. It fell in January and rose in February before taking its steepest tumble in more than two years in March.
Economists said that anticipation of higher taxes in both President Clinton’s deficit-reduction plan and health care package already is taking the edge off economic activity.
“People are starting to get a sense that a lot of bad things are happening in Washington,” said Temple University business school dean William Dunkelberg.
The rebound in housamong small-business ing sales has been long executives. Only 15 peranticipated by cent questioned in May economists who believed that sooner or later the lowest mortgage rates in 20 years would have to encourage buyers. But the overall increase was exaggerated by a doubling of sales in the Northeast, where a blizzard had knocked down sales the month before.
Housing is “what we look for to get us off of dead center when we have a pause. Earlier this year it wasn’t doing that, now it looks like it might,” said economist Martin A. Regalia of the U.S. Chamber of Commerce.
