New home sales in April rose sharply due to lower home prices

New home sales in April rose sharply, due to a record drop prices, the US Department of Commerce reports.

According to the report, new-home sales in April rose an unexpected 16.2 percent on record lower prices, which were down 11 percent. It was the largest single monthly surge in new-home sales in 14 years, coupled with a record decline in prices.

New-home sales in April rose at an annual rate of 981,000 units from a revised rate of 844,000 in March, the Department of Commerce said.

It read like a Wal-Mart sales pitch - low, low prices drove home buyers into the single-family home market with the median sales price of a new home falling $28,500 to $229,100 from $257,600 in March, the lowest price since September 2006 and the fast decline on record.

The previous record decline was in 1970.

Housing pundits looked at the results as a potential return to a stronger housing market, but cheap "bricks and sticks" doesn't mean a return to glory for the sector.

Don't expect much from home builder stocks in Friday's closing session, as lower prices could be interpreted to mean lower margins for builders, whose inventory of unsold homes still remains higher than housing pundits would like.