• New home sales unexpectedly rose 6.8 percent in April, to 517,000 units (SAAR), according to the U.S. Census Bureau.
• A rebound in sales in the Midwest and South accounted for all of the increase in new home sales, while sales in the Northeast and West fell slightly.
• The median sale price of new homes rose month-over-month for the first time in five months, although the typical new home is still 3.6 percent less expensive than it was in November.

Sales of newly built homes rose strongly in April from March, up 6.8 percent to 517,000 units at a seasonally adjusted annual rate (SAAR), largely defying expectations. A revised 10 percent decline in March tied the steepest one-month drop recorded in almost a year (June 214), and despite the monthly bump in April, the gains were not enough to bring new home sales levels back to their February highs.

April new home sales rose 26 percent year-over-year, and total sales year-to-date are running 22 percent above last year’s level through the first third of this year. Roughly 2.1 million newly built homes have been sold through April, up from roughly 1.7 million through the first four months of 2014.

New home sales were up in April in two of the four broad regions covered by the Census Bureau: the Midwest and the South. Sales in the South, which have accounted for more than half (55 percent) of total U.S. new home sales over the past year, rose 5.8 percent from March. New homes sold in the Midwest, which generally records only about 25 percent of the South’s sales, shot up 36.8 percent from March, accounting for almost two thirds (64 percent) of the total increase in national new home sales in April.

April was the first month this year in which the median sale price of new homes rose month-over-month, rising 5.3 percent from March to $297,500 (SA). The last time new home prices rose compared to the prior month was in November. However, even with the April increase, the typical new home is still 3.6 percent less expensive than it was in November.

Part of the reason for the increase this month is the composition of homes sold by price tier. Sales of new homes priced above the median accounted for 5 percentage points more of total sales compared to what those tiers were responsible for on average in 2014. More new homes are selling in more expensive tiers rather than less expensive tiers, defying expectations (for now) that homebuilders would soon begin building less-expensive, entry-level homes in order to accommodate demand from younger, first-time buyers.