House hunters may be desperate to buy new homes in today’s frenetic housing market, but maybe not at these prices.
New single-family home sales fell 5.9% in April compared to their March level, down to a seasonally adjusted annual rate of 863,000 units, according to the U.S Census Bureau’s monthly report. That’s well below the 970,000 that economists had predicted, according to Moody’s Analytics.
Meanwhile, the median price of a new single-family home surged to $372,400, a $38,200 increase (11%) compared to the previous month. Inventories improved somewhat, rising to a level that would sell out in 4.4 months—better than the 4 months seen in March, but well below normal figures.
The slowdown in sales of new homes in April—still higher than pre-pandemic levels—mirrors declines in sales of existing homes and a drop in the number of houses that builders are starting. Homebuilders are facing a number of obstacles as the economy recovers from the pandemic, including runaway prices for materials and overall sticker shock that is pricing potential buyers out of the market, according to economists.
“Affordability factors are clearly affecting new home sales,” said Chuck Fowke, chairman of the National Association of Home Builders, in a statement. “A growing number of builders are limiting sales in order to manage supply chains, including access and cost factors associated with lumber, appliances, and other building materials.”
The median price—a statistic prone to wild swings—is nearly back up to its record high seen in January. It rebounded from a slump in February and March that Wells Fargo attributed not to any real improvement in affordability, but to a statistical oddity caused by increased activity in regions of the country where houses are cheaper.