Purchases of new homes in America unexpectedly surged in April by the most in 14 years as buyers took advantage of the biggest decline in median prices since 1970.

New-home sales rose 16% to an annual rate of 981,000, the highest this year, the Commerce Department said yesterday in Washington. In a separate report, the department said that April orders for goods meant to last several years rose 0.6%, the third straight monthly increase.

The two reports mean economic growth at the start of the second quarter probably picked up from the first quarter’s 1.3% rate. That’s consistent with the Federal Reserve’s forecast for a “moderate” expansion in coming quarters. Treasury notes slid after the releases as investors reduced bets the Fed will need to cut interest rates this year.

“The economy is handling these two prime risk areas, housing and weakness in capital-goods spending, pretty well,” the chief U.S. economist at Lehman Brothers Holdings Inc. in New York, Ethan Harris, said.

The 16% jump in new home sales surprised all 72 economists surveyed by Bloomberg News before the report. The median forecast was for a 0.2% increase.

Falling prices and incentives offered by builders such as Centex Corp. are stirring demand for new homes after two years of falling sales. Economists had forecast sales at an 860,000 annual pace from an originally reported 858,000 rate the prior month, according to the median prediction. The Commerce Department reduced its March sales-rate estimate to 844,000.

Builders “have started dropping prices aggressively,” the president of Irvine, Calif.-based, John Burns Real Estate Consulting, John Burns, said in an interview. “When you start offering consumers a good deal, you start selling homes.”

Mr. Burns said the discounting is most pronounced in former hot markets such as California, Nevada, Arizona, and Florida.

Orders for American-made durable goods posted their longest string of monthly gains in almost two years. Excluding transportation equipment, durable goods orders rose a greater-than-forecast 1.5% for a second month.

Separately, the Labor Department said that the average of first-time claims for jobless benefits in the past four weeks fell to 302,750, the lowest in more than a year.

Treasury securities fell after the releases, with the benchmark 10-year note yield rising 1 basis point from late yesterday, to 4.86% at 1:12 p.m. in New York. The yield earlier touched 4.90%, the highest level since January.

“The reports show a healthy expansion in terms of hiring and spending,” an economist at JPMorgan Chase & Co. in New York who used to work at the Fed, Michael Feroli, said. “Housing has been the sick man of the economy, but we’re seeing that growth can pull through even with housing as sick as it’s been.”

Initial jobless claims rose by 15,000 to 311,000 in the week ended May 19, the Labor Department said. The four-week average fell from 306,300 the previous week. So far this year, weekly jobless claims have averaged 319,500, compared with 313,000 for all of last year.

Economists forecast durable goods would rise 1%, after an initially reported 4.3% jump in March, according to the median of 74 forecasts in a Bloomberg News survey. Estimates ranged from a decline of 2% to an increase of 3.1%.