New Homes Sales Jumped 4.1% in April

New homes sold at a faster pace than expected in April as demand remains strong despite higher mortgage rates.

Sales rose 4.1 percent to an annual rate of 683,000 in April, the Commerce Department reported Tuesday. This was a faster pace than economists had expected given the challenges of affordability created by the combination of high prices and the 30-year fixed rate holding near 6.4 percent.

Sales of newly built homes have been boosted by the lack of supply of previously owned homes on the market. Many people who might otherwise sell their homes are reluctant to trade from a relatively low mortgage rate to a higher one, creating what real estate professionals call a “lock-in” effect.

The data from the previous months were revised down. The March figure was revised down to 656,000 from the initial estimate of 683,000. New home sales are often volatile month-to-month and the data are frequently subject to large revisions.

The government measures the supply of new homes by calculating how many months it would take at the current sales rate to run through the new housing stock. This dipped to 7.6 months from 7.9 months in March but remains well above the normal range of four to six months. The all-time record high was 12.2 months in January of 2009, when the country was reeling from the bursting of the mortgage bubble and the financial crisis.

The all-time recorded low as 3.3 months in August 2020.
While the pace of new home sales is still down sharply from the post-pandemic house shopping spree, it is now around where it was pre-pandemic.

The median sales price of new houses sold in April was $420,800.  The average sales price was $501,000.

The South saw the biggest jump in sales. In the Midwest, sales climbed at a moderate pace. Sales were down in the Northeast the the West.