New home sales took a hit for the fourth-straight month in April 2022, falling well short of economic estimates and hitting a low not seen since the height of pandemic uncertainty in April 2020 as buyers grappled with the new reality of 5 percent-plus mortgage rates and rising home prices.
New single-family home sales dropped by 16.6 percent month-over-month, tallying the biggest monthly drop in nearly nine years, while sales plunged 26.9 percent year-over-year to a seasonally adjusted annual rate of 591,000, according to data released by the U.S. Census Bureau and the Department of Housing and Urban Development on Tuesday. An estimate by a Bloomberg survey of economists projected a rate of 749,000 sales in April.
By contrast, in April 2021, new single-family homes sold at a seasonally adjusted annual rate of 809,000.
“Rising mortgage rates and rising home prices have combined causing the market to level off at more balanced supply and demand conditions,” RCLCO’s Kelly Mangold said in a statement emailed to Inman.
“The market continues to feel impacts of geopolitical turmoil and supply chain issues, yet millennial households continue to demand for-sale housing, and many are migrating from high-cost coastal markets to high-growth Sun Belt markets where builder inventory is higher.”
New homes sold at a median sales price of $450,600 in April, up from March’s revised estimate of $435,000. Meanwhile, the average sales price in April was $570,300, up from. March’s revised estimate of $522,500.
By the end of April, the seasonally adjusted estimate of new homes for sale was 444,000, an 8.3-months’ supply of homes at the current sales rate, up from March’s revised estimate of a 5.9-months’ supply of homes.
The increase in new-home sales inventory and cooling consumer demand likely indicate a drop in construction starts to come, Chief Economist for the National Association of Homebuilders Robert Dietz tweeted on Tuesday. He also noted the sharp contrast between sales prices of new homes year over year.
Despite the uncertain economic forces at hand, Mangold noted that the overall state of the housing market remains strong.
“The for-sale housing market has remained a strong performer during the entirety of the pandemic, and despite the somewhat uncertain economic conditions — demand for additional new housing remains strong,” she said in a statement.
Last week, a report released by the National Association of Realtors showed that existing-home sales also declined, for the third consecutive month.
New home sales are a leading indicator of where the market is heading in the near-term, and at least one Twitter user suggested the latest numbers are a sign of a recession.