Sales of new U.S. homes fell 1.5 percent 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 May 23 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 percent 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 percent on a 30-year loan, according to mortgage buyer Freddie Mac.
In April, new-home sales tumbled 7.9 percent in the West and were essentially unchanged in the Midwest and South. Sales improved 11.1 percent 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 percent from a year ago, to $312,400. But that masks a broader change last month, which was more sales at luxury prices levels.
Ten percent 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 percent from a year ago, to $407,300.