New home sales plunge nearly 17% in April
Analysts expected new home sales to decline 1.7% in April
Housing market ‘staring into face of a perfect storm’: Jerry Howard
National Association of Home Builders CEO Jerry Howard argues he’s ‘very worried’ for the housing market as pending home sales continue to decline.
Sales of new single-family houses in the U.S. dropped significantly more than expected last month to the lowest level in two years as rising construction costs, home prices, interest rates and supply chain woes continue to batter the industry.
The U.S. Census Bureau's latest data shows the pace of new home sales fell by 16.6% in April from the month before at a seasonally adjusted rate of 591,000. Analysts surveyed by Refinitiv anticipated a dip of 1.7%.
A house under construction in the Cielo at Sand Creek by Century Communities housing development in Antioch, California, U.S., on Thursday, March 31, 2022. (Photographer: David Paul Morris/Bloomberg via Getty Images / Getty Images)
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The drop is 26.9% lower than a year ago, and the lowest since April 2020. This is the fourth straight month new home sales have declined.
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"April’s dismal new home sales data shows an industry besieged by higher construction costs, supply chain disruptions and by higher mortgage rates that are giving many potential buyers cold feet," said Robert Frick, corporate economist at Navy Federal Credit Union.
"Given the pipeline for bringing new homes to market is stretched so thin, we shouldn’t expect home building to add much to housing stock for the foreseeable future," he added.
Construction workers are seen at a new building site in Silver Spring, Maryland. (REUTERS/Gary Cameron - RTX2FCR6 / Reuters Photos)
The Census Bureau reported that the median sales price of new homes hit $450,600 last month. With interest rates now upward of 5%, the rising cost of homeownership is pricing more would-be buyers out of the market.
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"One year ago, 25% of new home sales were priced below $300,000," explained Odeta Kushi, deputy chief economist at First American. "In April of this year, only 10% of new home sales were priced below $300,000."
Lumber at the site of a house under construction in the Cielo at Sand Creek by Century Communities housing development in Antioch, California, U.S., on Thursday, March 31, 2022. (Photographer: David Paul Morris/Bloomberg via Getty Images / Getty Images)
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Inventory of new homes was also up last month, according to government data.
"New home months' supply jumped to 9 months, up from 6.9 months in March and the highest since 2010," Kushi noted, predicting, "Builders will likely slow construction in the months ahead."