New single-family home sales in the United States rose 4.1% in April, reaching a monthly high. The surge is fueled by a persistent shortage of existing homes on the market and a sharp drop in prices from last year’s highs. The Department of Commerce report follows last week’s data showing a surge in permits for the construction of detached houses in the future. Homebuilder confidence jumped to a 10-month high in May, indicating that recent credit crunches are not weighing on the housing market.
The housing market has been the hardest-hit sector in the Fed’s fastest rate hike cycle since the 1980s. However, experts believe the decline in median home prices is consistent with the hypothesis that homebuilders will adapt to the construction of new homes to 2020. Economists had expected sales of new homes, a small percentage of US home sales, to fall to 665,000 units. Instead, new home sales last month rose seasonally to 683,000 units, the highest since March 2022.
New home sales in April recovered to an 11.8% year-on-year increase. The median price for new homes in April was $420,800, down 8.2% from the same month last year. Existing home inventories are still 44% below pre-pandemic levels, with about half of home sellers reporting higher prices last week, according to data from the National Association of Realtors. Housing shortages have encouraged buyers to take advantage of lower mortgage rates, keeping builders busy even as the overall housing market remains depressed.
The government last week reported building permits rose to a seven-month high in April for single-family homes. The average interest rate on popular 30-year fixed mortgages has hovered between 6.09% and 6.73% this year after peaking at 7.03% in the second half of 2022, it said. Dollar rose against a basket of currencies, while US Treasury prices fell.
The New Home Sales Spring Recovery Report suggests the economy regained momentum early in the second quarter, along with a resilient labor market, strong retail sales, and a recovery in factory production. The Atlanta Fed hiked rates after last week’s positive flash PMI report, raising the GDP growth forecast for the second quarter to 2.9% annually from a pace of 2.6%. The index of new orders for private companies in the survey rose to 54.3 this month, up from 51.9 in April to the highest since May last year.