Purchases of new homes fell in April, reflecting a setback in the Western part of the country and indicating rising borrowing costs and property prices may limit the market’s progress, according to government data released Wednesday.
Single-family home sales declined 1.5% month-over-month to a 662,000 annualized pace (the estimate was 680,000) after a downwardly revised 672,000 rate (previously 694,000). The median sales price increased 0.4% year-over-year to $312,400. The supply of homes at the current sales rate was 5.4 months in April versus 5.3 months in March. The report incorporates revisions to seasonally adjusted new-home sales data back to January 2013.
Mortgage rates at a seven-year high and elevated home prices may be prompting at least some potential buyers to hold off. A tempering of demand at a time when costs of construction supplies are surging would represent an additional challenge for the homebuilding industry. So far, though, the pace of sales remains firm.
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Sales fell only in the West, which posted a 7.9% decline in April. Purchases were unchanged in the Midwest and up marginally in the South, the biggest region. Cooler demand could allow homebuilders to chip away at their backlogs.
The number of properties sold but not yet started increased in April to a five-month high, a sign that developers will stay busy in the coming months, the Commerce Department data showed.
New-home sales, tabulated when contracts get signed, account for about 10% of the market. They’re considered a timelier barometer than purchases of previously owned homes, which are calculated when contracts close and are reported by the National Association of Realtors.
Data released Thursday is expected to show that transactions of existing of homes were little changed in April at a 5.55 million annualized rate after a 5.6 million pace the prior month.
Purchases decreased to a 176,000 annual rate in the West and rose 0.3% in the South to a 355,000 pace. February home sales were revised down to a 659,000 rate from the previously reported 667,000. The report was released jointly by the Census Bureau and Department of Housing and Urban Development.