New home sales tanked in April, falling 16.6% compared with March and 26.9% compared with April 2021, as mortgage interest rates increased and home prices spiked, according to estimates from the U.S. Census Bureau and the Department of Housing and Urban Development.
New single‐family home sales were at a seasonally adjusted annual rate of 591,000, down from the March rate of 709,000 and down from the April 2021 rate of 809,000.
The median sales price of new home sold in April was $450,600. The average sales price was $570,300.
As of the end of the month, there were about 444,000 new homes available for sale in the U.S. – about a nine month supply at the current sales rate.
Odeta Kushi, deputy chief economist for First American, points out that April new home sales came in “well below consensus expectations.”
“The consensus was 750,000, while actual was 591,000,” Kushi says.
Kushi also points out that new home prices are up nearly 20% from a year ago.
“Affordability is a growing challenge as higher new-home prices and rising mortgage rates are pricing out some buyers,” she says. “One year ago, 25 percent of new-home sales were priced below $300,000. In April of this year, only 10 percent of new home sales were priced below $300,000.”
“The volume of signed sales contracts significantly declined in April as the cost of purchasing a home increased in 2022 as interest rates surged higher,” says Jerry Konter, chairman 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 existing home inventory are pricing many potential home buyers out of the market.”
“The April drop for new home sales is a clear recession warning,” adds Robert Dietz, chief economist for NAHB. “The median price of a newly-built single-family home increased 19.7 percent year-over-year. The combination of higher prices and increased interest rates are generating a notable slowing of the housing market. While the nation needs additional housing, home sales are slackening as tightening monetary policy continues to put upward pressure on mortgage rates and supply chain disruptions raise construction costs.”
Photo: Todd Kent