New-Home Sales Decline April
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WASHINGTON (AP) _ Sales of new homes in April posted the largest decline in four years as rising layoffs and job uncertainties made Americans feel less inclined to make a big-ticket purchase.
New-home sales declined by 9.5 percent to a seasonally adjusted annual rate of 894,000, the biggest drop since April 1997, the Commerce Department reported Thursday.
Importantly, April’s figure in part reflects a change in the government’s methodology for calculating new-home sales. That change resulted in monthly sales numbers being revised downward. Thursday’s report was the first to use the new calculation, which no longer takes into account new homes under construction before permits were issued. The old system had the effect of boosting sales figures.
Analysts had expected a decline in new-home sales, since the slowing economy is taking its toll on the labor market.
In March, sales rose 2.3 percent to a rate of 988,000, according to revised figures, reflecting in part the new methodology. The government previously reported that the level of sales had reached a record monthly rate of 1.02 million.
Seeking to hold off recession, the Federal Reserve has cut interest rates five time this year, totaling 2.5 percentage points. The rate cuts lower borrowing costs and are designed to encourage spending by consumers and investment by businesses, which would stoke economic growth.