New single-family home sales in the US fell sharply in April for the fourth month in a row, hitting their lowest level since April 2020.
The Commerce Department said on Tuesday that new home sales fell 16.6% month-on-month to 591,000 seasonally adjusted year-on-year in April. That’s just above the level of 582,000 reached in the first phase of the pandemic lockout, where the economy nearly stalled.
Economists had forecast home sales to fall 1.7 percent to 750,000 from the preliminary March report of 763,000. The March report was revised to 709,000.
Sales of existing homes are also falling. Home sales in April fell 2.4 percent from March. Seasonally adjusted annual sales of 5.61 million are the slowest since June 2020, according to data released last week by the National Association of Realtors. Compared to last year, sales fell 5.9 percent.
The sharp slowdown in home sales is in line with the possibility of a recession starting in the next 12-16 months. On the other hand, rising mortgage rates and rising housing prices likely indicate that a recession is not yet or has already begun.
New home sales are down 26.9% since the annual purchase level of 809,000 in April 2021. Beers were 26.9% lower than in the same month last year, when they had an adjusted annual rate of 809,000.
The median price of a new home rose from $435,000 last month to $450,600 in April. This is an all-time record. After adjusting for inflation, the pre-crisis high of 2007 would have been $365 thousand in today’s dollars. In real terms, new home prices have increased by about 23.3 percent since 2007.
The median home price is even higher at a record $570,300, meaning most homes purchased are at the high end of the market.
Mortgage rates have increased this year. At the end of last year, the 30-year fixed-rate mortgage was 3,353 percent. It had risen to 4.811 percent at the end of March. At the end of April, it was 5,415%. As a result, the monthly payment a buyer must pay for a home they bought in April is hundreds of dollars more than at the start of the year. This may have driven some potential buyers away from the market.
Also, according to a recent poll by CBS News and YouGov, 69% of Americans think the economy is bad. With fears of an impending recession in the near future, some families may also be discouraged from buying. High inflation and falling real incomes undermine consumer confidence.
New home sales are being considered at the time of signing, so April figures will reflect market conditions and consumer sentiment at the time. Existing home sales are counted at closing, which usually takes place 30 to 60 days after signing, making them always an indicator.
The start of residential construction is considered when project construction begins and is often a leading indicator for both real estate and the economy as a whole. Single-family housing construction fell in three of the first four months of the year. In April, the number of new buildings per family fell 13.4% from March to 1,087,000.
The number of detached houses for sale increased rapidly. In April, 444,000 seasonally adjusted homes were put up for sale annually. This represents a nine-month offer at current sales levels and indicates that home builders have more inventory than usual. About four to six months is generally considered a balanced, normal supply.
Supply chain restrictions and a crowded job market also hamper construction, leaving many homes unfinished. The inventory of new homes under construction was 5.9 months, close to the record set in 1980. More than 288,000 homes are under construction since December 2006.
There are 118,000 homes for sale that have not yet started construction, the most recorded, which also indicates supply constraints. That’s a 2.4-month reserve, almost twice the normal level.
Source: Breitbart
