U.S. new home sales rise by most in six months

WASHINGTON, May 23 (UPI) -- The number of new homes sold in the U.S. rose sharply in April, reaching a six-month high as mortgage rates have fallen in the last few months.

Sales of recently built homes grew by 6.4 percent from March to an annualized rate of 433,000, according to the Commerce Department. This was the first increase since January and was higher than the 425,000 estimate made by economists polled by Bloomberg News.

The data comes a day after the sale of previously owned homes grew by 1.3 percent. The increase in both figures could suggest that the housing market is showing some recovery. Housing was very depressed earlier this year because of harsh winter weather combined with buyers struggling to buy homes after prices rose last year.

Declining borrowing costs and an uptick in employment opportunities has helped improve the prospects of the housing market, and a pick up in construction costs will help keep prices low.

Home sales are still 4.2 percent below April 2013 levels. New homes sales rose in the South and Midwest, dipped in the Northeast, and stayed steady in the West. Median home prices are also lower than they were a year ago.

Apart from the potential buyers, the Federal Reserve is also closely following the housing market, as it has said in the past that a depressed housing sector could affect other aspects of the economy's improvement.