New Home Sales Fall To Four-Month Low
New home sales fell to a four-month low in March to a seasonally adjusted annual rate of 763,000, down 8.6%, according to data from the U.S. Census Bureau and the Department of Housing and Urban Development.
The massive dropoff can be attributed to the rising cost of buying a home. Home price appreciation and increasing interest rates are pricing potential buyers out of the market.
Between rates and prices, monthly mortgage payments are 19.5% higher than they were three months ago and 38% higher than a year ago.
Meanwhile, some sellers are opting not to put their homes up for sale, exacerbating the stock shortage and driving up competition.
The seasonally‐adjusted estimate of new houses for sale at the end of March was 407,000, representing a supply of 6.4 months at the current sales rate.
The median sales price of a new home was up 21.4% YOY to $436,700.
The Federal Housing Finance Agency reported this week that house prices set another record in February, up 19.4% YOY and 2.1% from January 2022. The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index reported similar numbers.
“U.S. home prices continued to advance at a very rapid pace in February,” says Craig J. Lazzara, Managing Director at S&P DJI.
However, he added that the “macroeconomic environment is evolving rapidly and may not support extraordinary home price growth for much longer… We may soon begin to see the impact of increasing mortgage rates on home prices.”
In a weekly note, Nathaniel Drake of Fannie Mae’s Economic and Strategic Research Group said that the full effects of rising interest rates have “yet to be felt.”