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WASHINGTON -- New-home purchases rose in April to the highest level so far this year after plunging to a record low two months earlier.
Sales climbed 7.3 percent to a 323,000 annual pace last month, according to figures Tuesday from the U.S. Commerce Department. Housing prices rose from a year earlier.
Job gains and increased affordability may be starting to help underpin a housing market that's lagged behind the rest of the economy. Nonetheless, the prospect that foreclosures will keep driving down property values means that buyers may continue to favor previously owned dwellings, indicating it will take years for builders to see a full recovery.
"Affordability is good and we are getting some job growth," Robert Brusca, chief economist at Fact & Opinion Economics in New York, said before the report. "There might be light at the end of the tunnel."
The median selling price increased 4.6 percent from the same month last year, to $217,900, the report showed. The gain may reflect a change in the mix of sales to higher- priced homes in the West, where demand jumped 15 percent. The other three regions also experienced increases in purchases.
There were 175,000 new houses on the market at the end of April, the fewest since records began in 1963.
Building executives are still concerned. Demand for new houses will remain weak into next year, predicted Bill Wheat, chief financial officer of Fort Worth, Texas-based D.R. Horton Inc., the second-largest U.S. home builder by revenue. "We feel it could still be a struggle in 2012."
Builders are cutting back as a result. Housing starts fell 11 percent in April to a 523,000 annual pace, the second-weakest reading since April, 2009's record low, figures from the Commerce Department showed last week.
One reason for the slump is growing interest from investors in distressed properties. Previously owned homes sold at a 5.1 million annual rate in April, down 0.8 percent from the prior month, data from the National Association of Realtors showed Thursday. All-cash deals accounted for 31 percent of transactions, and distressed properties, including foreclosures and short sales, made up 37 percent.
CoreLogic Inc. in March estimated about 1.8 million homes were more than 90 days delinquent, in foreclosure or bank-owned, a so- called "shadow inventory" set to add to the unsold supply of 3.87 million previously owned homes already on the market.
Foreclosures have weighed on prices. The S&P/Case-Shiller index of property values in 20 cities fell 3.3 percent in February from a year earlier, the biggest 12-month decrease since November, 2009. The gauge is down 33 percent from its July, 2006 peak.
But buyers are still scared.
The 9 percent unemployment rate last month, almost two years into an economic recovery, compares with an average of 4.8 percent in the three years before the recession began.