New Home Sales in April Down on Higher Mortgage Rates

Mortgage rates that averaged above 7% since mid-April per Freddie Mac data acted as a drag on new home sales last month. Sales of newly built, single-family homes in April fell 4.7% to a 634,000 seasonally adjusted annual rate from a downwardly revised reading in March, according to newly released data from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. The pace of new home sales in April is down 7.7% from a year earlier.

A new home sale occurs when a sales contract is signed, or a deposit is accepted. The home can be in any stage of construction: not yet started, under construction or completed. In addition to adjusting for seasonal effects, the April reading of 634,000 units is the number of homes that would sell if this pace continued for the next 12 months.

New single-family home inventory in April remained elevated at a level of 480,000, up 12.1% compared to a year ago. This represents a 9.1 months’ supply at the current building pace. A measure near a six months’ supply is considered balanced.

A year ago, there were 68,000 completed, ready-to-occupy homes available for sale (not seasonally adjusted). By the end of April 2024, that number increased 42.6% to 97,000. However, completed, ready-to-occupy inventory remains just 20.5% of total inventory, while homes under construction account for 58% of the inventory. The remaining 21.5% of new homes sold in April were homes that had not started construction when the sales contract was signed.

The median new home sale price in April was $433,500, down 1.4% from March, and up 3.9% compared to a year ago. In terms of affordability, the share of entry-level homes priced below $300,000 has been steadily falling in recent years. Only 17% of the homes were priced in this entry-level affordable range, while 34% of the homes were priced above $500,000. Most of the homes were priced between $300,000-$500,000.

Regionally, on a year-to-date basis, new home sales are up 22.4% in the Northeast, 22.3% in the Midwest and 14.0% in the West. New home sales are down 10.5% in the South.