New-Home Sales Surge -- but Don't Celebrate Yet

New-home sales jumped 16% in April -- the biggest percentage increase since 1993 -- but despite the positive news, sales and construction activity may not have hit bottom yet.The U.S. Census Bureau reported new single-family home sales rose from a seasonally adjusted annual rate of 844,000 in March to 981,000 in April. The April sales pace is off by 10.6% since April 2006. The rebound represents the first increase in new-home sales this year, and it "definitely is a very positive number," said Adam York, an economic analyst at Wachovia Corp. But the economist said he would not be surprised to see a downward revision in the April number or a decline in sales in May. While the sales pace increased in April, Mr. York said the actual level of unsold homes or inventory "remains extremely high," which is not good news for homebuilders. In addition, filings for construction permits are weak and sales cancellations are still fairly high, he said.