US sales of new homes slipped 1.5 per cent in April

WASHINGTON – Sales of new U.S. homes fell 1.5 per cent in April, held down by a shortage of affordable houses in the most desirable areas and sharp pullback in purchases in the western United States.

The Commerce Department said Wednesday that new homes sold last month at a seasonally adjusted annual rate of 662,000. Despite the setback, new-home sales so far this year are 8.4 per cent higher than in 2017.

A solid job market and a shortage of existing homes for sale have led more people into the new home market, even though they are generally more expensive than existing homes. Sales last month occurred disproportionately at the higher end, where profit margins are often greater for builders.

Momentum in the U.S. housing market has overcome even a supply shortage because mortgage rates remain near historic lows. But average mortgage rates have been climbing in tandem with higher rates throughout the economy, reaching a seven-year high of 4.61 per cent on a 30-year loan, according to mortgage buyer Freddie Mac.

In April, new-home sales tumbled 7.9 per cent in the West and were essentially unchanged in the Midwest and South. Sales improved 11.1 per cent in the Northeast. The new-home sales figures are often volatile on a monthly basis and are often revised.

The median sales price of a new home rose 0.4 per cent from a year ago, to $312,400. But that masks a broader change last month, which was more sales at luxury prices levels.

Ten per cent of new homes purchased in April cost more than $750,000 — twice the percentage of homes bought last year in that range. As a result, the average price of a new home in April shot up 11.3 per cent from a year ago, to $407,300.