New home sales rise in April to highest level in over a year
New home prices tumble 8.2% from one year ago, most since 2020
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Sales of new U.S. homes rose for the second straight month in April as limited resale inventory helped to jolt buyer demand for new construction.
New single-family home purchases rose 4.1% to a seasonally adjusted annual rate of 683,000 units, the Commerce Department reported Tuesday. Economists surveyed by Refinitiv expected new home sales – which account for a small percentage of total sales – to fall 2.6% last month.
It marked the strongest pace of sales since March 2022, an early sign the housing market is beginning to stabilize. Sales are up 11.8% from the same time one year ago.
"Home builders are fitting nicely into this spring housing season that is starved for new inventory," said Nicole Bachaud, Zillow senior economist. "Homebuyers are hungry for anything they can afford, and home builders are happy to meet them where they are."
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Homes in Rocklin, California, US, on Tuesday, Dec. 6, 2022. ( Photographer: David Paul Morris/Bloomberg via Getty Images / Getty Images)
The median price for a new home, meanwhile, tumbled to $420,800 in April, marking the biggest decline since April 2020, when the economy was still in the throes of the COVID-19 pandemic.
The interest-rate-sensitive housing market entered a deep freeze last year in the wake of the Federal Reserve's aggressive interest-rate hike campaign. But as mortgage rates have slowly declined from a peak of 7% – and as buyers grapple with limited inventory – the housing market has shown early signs of stirring back to life.
At the current pace of sales, it would take roughly 7.6 months to exhaust the inventory of existing homes. Experts view a pace of six to seven months as a healthy level.
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At the current pace of sales, it would take roughly 2.6 months to exhaust the inventory of existing homes. Experts view a pace of six to seven months as a healthy level. (Jeremy Erickson/Bloomberg via Getty Images / Getty Images)
The surge in new home sales likely contributed to the higher-than-expected increase in confidence among builders in the housing market this month.
The National Association of Home Builders/Wells Fargo Housing Market Index, which measures the pulse of the single-family housing market, rose five points to 50, the highest reading since July.
It marked the first time in nearly a year that the index pulled out of negative territory.
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"New home construction is taking on an increased role in the marketplace because many homeowners with loans well below current mortgage rates are electing to stay put, and this is keeping the supply of existing homes at a very low level," said Alicia Huey, NAHB chair and a custom home builder and developer from Birmingham, Alabama.