New Home Sales Number Is a Start -- but Not a Solution

NEW YORK (TheStreet) -- April's new home sales were better than the winter's, but probably not good enough to quickly calm the worries about the housing recovery -- expressed by everyone from bond market buyers to Federal Reserve Chair Janet Yellen.

The Census Bureau said single-family homes sold at an annual rate of 433,000 in April -- up 6.4% from the revised March pace of 407,000 and down 4.2% from last April, shortly before mortgage rates jumped after the Fed began hinting about ending its policy of pumping money into the economy through bond purchases. New-home sales beat forecasts of 420,000.

The real issue in the numbers is the pace of sales in the South and the West -- two regions where construction slowed this winter, but for very different reasons. The problem in the South this winter was weather, with environs as far south as Atlanta getting sucked into the polar vortex. The problem out west, though, was a little more scary -- a quick rebound in prices has cut home affordability for many consumers, especially in California and parts of Arizona.

The weather problem has fixed itself, but the regional affordability issues haven't. And it will take a few months to see whether local housing markets can adjust to the new prices and keep homes selling fast enough to sustain long-sought growth in construction jobs.

In the South, sales were up 3.1% in April to an estimated annual rate 235,000, after dropping in both February and March. Sales in the West were unchanged at 92,000 (also annualized). Between them, the two regions are more than three-fourths of the market, overwhelming the Midwest and Northeast.

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