New home sales fell 16.6% in April as mortgage interest rates jumped higher

New home sales tumbled in April, falling 16.6% from March and 26.9% from April 2021, as mortgage interest rates rose and house prices climbed skyrocketing, according to estimates from the US Census Bureau and the Department of Housing and Urban Development.

Sales of new single-family homes came in at a seasonally adjusted annual rate of 591,000, down from March’s rate of 709,000 and down from April 2021’s rate of 809,000.

The median selling price for new homes sold in April was $450,600. The average sale price was $570,300.

At the end of the month, there were about 444,000 new homes available for sale in the United States, or about nine months of supply at the current sales rate.

Odeta Kushi, deputy chief economist for First American, points out that April new home sales were “well below consensus expectations.”

“The consensus was 750,000, while the reality was 591,000,” says Kushi.

Kushi also points out that new home prices are up nearly 20% from a year ago.

“Affordability is a growing challenge as rising new home prices and rising mortgage rates are driving some buyers away,” she says. “A year ago, 25% of new home sales were priced below $300,000. In April of this year, only 10% of new home sales were priced below $300,000. »

“The volume of signed sales contracts fell significantly in April as the cost of buying a home rose in 2022 as interest rates rose,” said Jerry Konter, president of the National Association of Home Builders. (NAHB), in a statement. “Higher construction costs, fueled by rising material prices and supply-side constraints, along with limited inventory of existing homes, are keeping many potential buyers off the market.”

“April’s decline in new home sales is a clear warning of a recession,” adds Robert Dietz, chief economist for NAHB. “The median price of a newly built single-family home increased 19.7% year over year. The combination of rising prices and rising interest rates is generating a noticeable slowdown in the housing market. As the country needs more homes, home sales are slowing as tighter monetary policy continues to put upward pressure on mortgage rates and supply chain disruptions increase housing costs. construction.

Photo: Todd Kent

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