Business

Home sales make gains, while prices take a plunge

WASHINGTON - The beleaguered housing industry is sending mixed signals, with sales of new homes surging in April by the biggest amount in 14 years while prices endured a record plunge.

Analysts said the price drop could provide evidence of builders' desperation. They are looking to reduce a glut of unsold homes in the face of the worst slump in sales in more than a decade.

The Commerce Department reported Thursday that sales of new single-family homes jumped by 16.2 percent in April to a seasonally adjusted annual rate of 981,000 units.

That was the biggest one-month sales gain since a 16.4 percent surge in April 1993. Even with the increase, however, sales are 10.6 percent below the level of a year ago.

The median price of a new home - the midway point between the costliest and cheapest - fell to $229,100, a record 11.1 percent below the March level. The price was 10.9 percent below the level of a year ago, the biggest year-over-year price decline since 1970.

On Wall Street, the stock market retreated as hopes faded that the Federal Reserve will have to resort to an interest rate cut to stimulate the economy. The Dow Jones industrial average fell 84.52 points to close at 13,441.13.

Analysts said the drop in home prices probably reflected efforts by builders to cut prices more aggressively to sell homes.

They cautioned against reading too much into a 16.2 percent jump in sales, the first increase after three consecutive months of sales declines. Analysts noted that this series is subject to wide revisions and that much of the strength came from a big increase in the South, which they said could be partially weather-related.

In Thurston County

New home sales in April declined in Thurston County from 108 last year to 89 this year, while median sales prices increased from $269,495 to $293,209 in the same time, according to Northwest Multiple Listing Service. The results do not reflect sales outside of the multiple's membership.

The Olympian

On the Web

New home sales: www.census.gov/newhomesales

Durable goods: www.census.gov/m3

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