Sales of new homes declined in April by more than forecast as builder incentives failed to motivate potential buyers at the start of the spring selling season.
Purchases of new single-family homes decreased 6.2% from March to a 622,000 annualized pace, according to government data released Thursday. Economists expected a 660,000 rate, based on the median estimate in a Bloomberg survey.
The sales setback in April suggests the nation is still struggling to emerge from a three-year housing funk. Despite builder efforts to construct lower-priced homes and offer various incentives, mortgage rates are rising and many lower-income Americans still view the housing market as unaffordable.
Housing construction, which has subtracted from economic growth through all of 2025 and into the first quarter this year, may stay constrained in coming months as builders focus on reducing inventory.
The new-home sales report showed that the number of properties for sale in April eased from a year ago to 489,000. At the latest sales pace, the supply of new homes would last 9.4 months.
The report showed the median sales price of a new single-family home increased 2.2% in April from a year ago to $422,500. While fewer houses priced less than $300,000 were sold, more contracts were signed on homes in the $400,000 to $500,000 range.
A sustained rise in prices will exacerbate affordability constraints in the wake of a more than half percentage-point increase in mortgage rates since the start of the Iran war.
Sales dropped in three of four regions. In the South, the United States’ biggest home-selling region, contract signings decreased nearly 10% in April. Sales slumped 25% in the Midwest to the lowest level in more than a year. In the West, they jumped 18.7% to the fastest pace since October.
New-home sales are seen as a more timely measurement than purchases of existing homes; the latter are calculated when contracts close. However, the data are volatile on a monthly basis.
The government report showed 90% confidence that the change in new-home sales ranged from a 19% decline to a 6.6% gain.
Sasso writes for Bloomberg.
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