Home sales tumbled from near a 9 1/2-year high-housing recovery likely remains intact amid a tightening labor market

http://www.nasdaq.com/article/us-new-home-sales-tumble-from-near-912year-high-20170523-00841#/ixzz4hw3dkQpQ

By Lucia Mutikani WASHINGTON, May 23 (Reuters) - New U.S. single-family home
sales tumbled from near a 9-1/2-year high in April, but the
housing recovery likely remains intact amid a tightening labor
market.
    The Commerce Department said on Tuesday new home sales
declined 11.4 percent to a seasonally adjusted annual rate of
569,00 units last month. March's sales pace was revised up to
642,000 units, which was the highest level since October 2007.
    Economists polled by Reuters had forecast new home sales,
which account for 9.8 percent of overall home sales, decreasing
1.5 percent to a pace of 610,000 units last month from the
previously reported rate of 621,000 units.
    New home sales, which are derived from building permits, are
volatile on a month-to-month basis. Sales increased 0.5 percent
on a year-on-year basis last month. April's sales drop came
after three straight months of increases.
    Shrinking labor market slack, marked by a 4.4 percent
unemployment rate, is improving employment opportunities for
young Americans, helping to underpin demand for housing.
    The housing market also continues to be supported by
historically low mortgage rates, with the 30-year fixed mortgage
rate hovering just above 4.0 percent. Luxury homebuilder Toll
Brothers Inc <TOL.N> on Tuesday reported a 40 percent rise in
quarterly profit, boosted by an increase in home sales.
    A survey last week showed homebuilder sentiment rising in
May, with builders upbeat about sales over the next six months
as well as current sales conditions.
    But rising building material costs as well as shortages of
lots and labor have left builders struggling to meet demand,
keeping house prices elevated. A report last week showed
homebuilding fell for a second straight month in April, hitting
its lowest level in five months.
    U.S. stocks further trimmed gains after the data on Tuesday
while prices of U.S. government debt were mostly trading higher.
The U.S. dollar <.DXY> was slightly firmer against a basket of
currencies. The PHLX housing index <.HGX> slipped 0.1 percent,
with shares in the nation's largest homebuilder, D.R. Horton
<DHI.N>, falling 0.1 percent.
    In April, new single-family homes sales fell 7.5 percent in
the Northeast region. Sales plunged 26.3 percent in the West to
their lowest level since October 2015. They fell 4.0 percent in
the South and declined 13.1 percent in the Midwest.
    The inventory of new homes on the market increased 1.5
percent to 268,000 units last month, the highest level since
July 2009. Still, new housing stock remains less than half of
what it was at its peak during the housing boom in 2006.
    At April's sales pace it would take 5.7 months to clear the
supply of houses on the market, up from 4.9 months in March.
    A six-month supply is viewed as a healthy balance between
supply and demand.

 (Reporting by Lucia Mutikani; Editing by Paul Simao)
 ((Lucia.Mutikani@thomsonreuters.com; 1 202 898 8315; Reuters
Messaging: lucia.mutikani.thomsonreuters.com@reuters.net))

Keywords: USA ECONOMY/HOUSING (UPDATE 1)

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