New Home Sales, which measure signed contracts on new homes, fell 4.7% from March to April, missing forecasts that were expecting them to rise. Signed contracts were also 7.7% lower than they were in April of last year.
What’s the bottom line? This report measures buyers who were shopping for homes last month when rates peaked, so the pullback is understandable as some buyers chose to delay their home search.
However, demand for new construction remains strong due to the persistent shortage of existing homes for sale. On that note, more “available” supply is needed to meet buyer demand. While there were 480,000 new homes available for sale at the end of April, slightly higher than the 470,000 seen in the previous report, only 98,000 were completed, with the rest either under construction or not even started yet.
Also, the median home price fell 1.4% from March but this was not due to falling home prices, which continue to rise nationwide per Case-Shiller and other appreciation indexes. The median home price represents the mid-price of sales, meaning it’s influenced by the mix of sales in any given month. Builders are constructing smaller, more affordable homes to meet buyer demand, and that pushed the median home price lower comparatively.
