April Sees a Significant Drop in US New Home Sales

In a surprising turn of events, new home sales in the United States experienced a 4.7% month-on-month decline in April. This unexpected downturn was significantly worse than the anticipated 2.2% month-on-month drop, resulting in a year-on-year decrease of 7.7% in new home sales.

Revisions to Previous Data

As is often the case, the data from previous months was adjusted downwards.

Stagnation in New Home Sales

Taking into account these revisions, the seasonally adjusted annual rate (SAAR) of new home sales fell to 634k. This figure has remained more or less the same for the past eight years.

High Median Prices for New Homes

The median price of new homes continues to hover near record highs, despite the drop in sales.

High Mortgage Rates Impacting Existing-Home Sales

Mortgage rates above 7% are adversely affecting existing-home sales, according to Lawrence Yun, the Chief Economist at the National Association of Realtors. He stated last week that these sales are currently "stuck" due to the high rates.

Closing Thoughts

The unexpected drop in new home sales in April, coupled with high median prices and mortgage rates, paints a challenging picture for the US housing market. It raises questions about the sustainability of current pricing trends and the overall health of the market. What are your thoughts on this development? Do you think this trend will continue, or is it just a temporary setback? We'd love to hear your opinions. Feel free to share this article with your friends and engage in a discussion. Don't forget to sign up for the Daily Briefing, delivered to your inbox every day at 6pm.