US new home sales soar to 13-month high in April

Sales of new US single-family homes jumped to a 13-month high in April, boosted by a persistent shortage of previously owned houses on the market, though sales for the prior month were not as strong as previously thought.

New home sales increased 4.1 per cent to a seasonally adjusted annual rate of 683,000 units last month, the highest reading since March 2022, the Commerce Department said on Tuesday (May 23). March’s sales pace was revised lower to 656,000 units from the previously reported 683,000. The government revised the sales, inventory and months’ supply data going back to January 2018.

New home sales are counted at the signing of a contract, making them a leading indicator of the housing market. They, however, can be volatile on a month-to-month basis.

Economists polled by Reuters had forecast new home sales, which account for a small share of US home sales, would fall to a rate of 665,000 units. Sales rebounded 11.8 per cent on a year-on-year basis in April.

The inventory of existing homes remains 44 per cent below its pre-pandemic levels, according to data from the National Association of Realtors, which also last week reported price rises in roughly half of the country, multiple offers and many homes being sold above list price.

The shortage is pushing buyers keen to take advantage of dips in mortgage rates, keeping builders busy even as the overall housing remains depressed.

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The government reported last week that single-family building permits increased to a seven-month high in April.

The average rate on the popular 30-year fixed mortgage has been hovering in the middle of its 6.09 per cent and 6.73 per cent range this year, after peaking at 7.03 per cent in late 2022, data from mortgage finance agency Freddie Mac indicated.

New home sales increased last month in the Mid-west and South regions, but dropped in the North-east and West.

The median new house price in April was US$420,800, an 8.2 per cent drop from a year ago. There were 433,000 new homes on the market at the end of last month, up from 432,000 in March. At April’s sales pace it would take 7.6 months to clear the supply of houses on the market, down from 7.9 months in March. REUTERS