(eToro Blog) The U.S. housing sector may be slowly coming up out the abyss, as suggested by the earlier release of new home sales for the month of April by the U.S. Census Bureau. The data showed that new home sales improved to 323,000 (on a seasonally adjusted, annualized basis) in April, from March's upwardly revised 301,000. Analysts had predicted that April's new homes sales would be closer to 305,000, little changed from the previous month and holding close to the record low.

Though besting forecasts, the data still suggests that the U.S. real estate market continues to be the weaker link in the economic recovery. Comparatively, 420,000 new homes were sold during the same period last year, a difference of 23.1%. Then, the median sales price of a new home was $217,000; in April 2011, it's $175,000.

Analysts say that potential new homebuyers worry that neighborhood property values will continue to fall as the numbers of foreclosures rises, and that they are shunning new homeownership until such time as property values stabilize. If at all inclined, potential home buyers are more likely to purchase an existing home, simply because there are so many available on the market. Most analysts agree that until the supplies of existing homes dwindle, sales of new homes, as well as the construction of new homes, will be depressed and most industry experts don't see any improvement for at least the next 18 months if not longer.

Analysts point out that a recovery in the real estate sector is still well off. But in the here and now, the unexpectedly positive housing data is being well received by investors and is helping to buoy the U.S. equity markets. The DJIA is currently higher at 12,386.45 points, and on the eToro trading floor buyers outnumber sellers by 7 to 5. The S&P 500 is also higher, recently at 1,322.89, with sentiment on the eToro trading floor bullish in favor of buying by a ratio of 8 buyers to 1 seller. The NASDAQ, is trading slightly lower at 2,753.44 points, however sentiment on the eToro trading floor favoring buying over selling by 8 buyers to 2 sellers.

Copyright 2011 eToro Blog

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