New-home sales unexpectedly rose in April, thanks to a significant downward revision of March sales numbers, according to statistics released Tuesday by the Commerce Department. Sales of new single-family houses last month were at a seasonally-adjusted annual rate of 526,000, up 3.3 percent from one month ago -- but still the second-worst sales pace since October 1991. See the report. March's numbers were revised downward significantly from an originally-reported 526,000 to 509,000, underscoring the volatility of new-home sales estimates, especially in a turbulent housing market. The revision made March the worse new-home sales total since April of 1991. Bloomberg News reported that most economists had expected the April sales rate to come at 520,000, making the April numbers better than originally expected. The question, of course, is whether this month's numbers are also likely to be revised downward in subsequent months.
a smoking gun?
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The seasonally-adjusted inventory estimate for April was 456,000, representing a supply of 10.6 months at the current sales rate, the Commerce Dept. said. The graph (right), provided courtesy of the Calculated Risk blog and used with permission, show that months of supply is now scratching against an all-time high, set in 1980 at 11.6 months. Yet, it's well worth noting that new home inventories did actually decrease, as did months of supply, which had been at 11.1 months in March. Inventory had been at 467,000 in March -- and the number of homes completed and waiting to be sold decreased to 181,000, the fewest since July of last year. "This is sort of a good news, bad news report," said one source, an MBS analyst who asked not to be named. "The good news is that sales posted a gain, and inventories appear to be falling." "The bad news is that it's sort of an artificial gain that we can't have much confidence in. Without the revision, the gain in sales goes away, and cancellation rates don't show much in the way of decreases, either."