New home sales hit highest point in two years

A government tax incentive spurred new home sales last month to the highest level in two years.

Purchases increased 14.8 percent to a seasonally adjusted rate of 504,000 in April, exceeding analysts' estimates, bolstered by the expiring tax incentive and lower mortgage rates, Commerce Department figures showed Wednesday. 

Buyers rushed to take advantage of the as-high-as $8,000 tax incentive that required signed contracts by the April 30 expiration date and closing by the end of June. 

April's increase follows a 29.8 percent jump in March, the biggest monthly increase in 47 years. The rise in sales didn't help the median sales price, which fell 9.6 percent below last year's level to $198,400, the lowest level since 2003. 

Combined March and April figures boosted sales to the highest level since May 2008, but still well below housing boom levels. 

Sales are likely to slow in the next several months without the tax incentive, combined with constrained lending and slow job growth. 

The rise in sales follows a 7.6 percent jump in existing home sales in April, announced Monday by the National Association of Realtors. 

Sales were up in every region except the Northeast. Sales increased 31.6 percent in the Midwest, 21.7 percent in the West and 10.8 percent in the South.