A pile of lumber for a home under construction at the Cold Spring Barbera Homes subdivision, Wednesday, November 8, 2023, in Loudonville, New York, USA.
Angus Mordaunt | Bloomberg | Getty Images
The U.S. Census Bureau announced Thursday that new home sales fell 4.7% in April from the previous month and were down a steep 7.7% from a year ago.
Sales figures for March were also significantly revised downward.
Rising mortgage rates are clearly hampering sales. Monthly measurements are based on signed contracts, so they reflect the purchases you made and transactions you made during the month based on current rates.
The average interest rate on a 30-year fixed mortgage was in the high 6% range at the end of March, but rose sharply to 7.5% in April, making it more difficult to buy a home.
In addition, the median price for new homes sold in April was $433,500, 4% higher than in April 2023. Part of that is due to the mix of homes for sale, mostly at the higher end of the market. These buyers often purchase all-cash, so they are less affected by mortgage rates.
Builders say they can’t lower prices because of high costs of land, labor and materials. Large builders are slashing mortgage rates to boost sales, but they can only do so because they’re so big. doctor horton and toll brothers The company reported better-than-expected results for the most recent quarter, citing increased demand due to a supply shortage in the resale market.
“While the big builders (who are gaining market share) are telling an optimistic story, the overall new-home industry is seeing the pace of new-home sales slow below the five-year average,” said Peter Boockvar, chief investment officer at Blakely Financial Group and CNBC contributor.
New metrics released Thursday by the National Association of Home Builders and Wells Fargo show that in the first quarter of 2024, mortgage payments for a median-priced new single-family home will cost 38% of the nation’s median household income. was necessary. Low-income households earning just 50% of the area median income would have to spend 77% of their income paying for the same new home.
Due to a lack of supply, prices for both new and used homes continue to rise. There is very little that can be sold at a lower price point on the resale market. The number of new homes continues to grow, up 12% year over year, but new homes come at a price premium and are out of reach for low-income buyers.
“There is a shortage of approximately 1.5 million housing units nationwide, and the shortage of housing units is a major driver of growing housing affordability challenges,” said NAHB Chief Economist Robert Dietz. “Policymakers at all levels of government should enact policy changes such as reducing permit approval times, providing resources for skilled worker training and fixing the building materials supply chain so builders can build more housing.”
