New Home Sales Surge

While it's too soon to say if it represents a long-term trend, sales of new homes throughout the nation during April posted their biggest surge in 14 years.

Experts around the country generally believe that the housing market, both new and existing homes, is still going through an adjustment period as prospective home buyers get used to having prices increase at only a modest pace, sales take a little longer and a larger selection of homes.

Sales of new homes soared to a seasonally adjusted rate of 981,000 in April - up an eye-popping 16 percent from March - the Commerce Department reported recently.

Tempering that report, existing home sales were down 10.7 percent from the prior year, the National Association of Realtors reported.

New home buyers during April were buoyed by sunny weather in the South and aggressive price-cutting by builders.

Though the price cuts should continue to help the new-home market, lots of new homes in some markets nationwide are still sitting empty.

And whatever strength exists in the market is mainly in the low end, where homes remain more affordable for middle-class buyers.

Heavy buying of modestly priced homes pulled the overall median price down 11 percent from April 2006 to $229,100 - a far cry from California's statewide median price of $597,640.

The April figures contradict the pessimistic mood and financial results of many big builders.

Contract cancellations have been creeping back up as mortgage lenders tighten credit standards. As a result, buyers are having more trouble getting loans.