WASHINGTON, DC -- The Department of Commerce reported that new home sales dropped 5.8% in April to a seasonally adjusted annual rate of 909,000. This is much greater than the 3.2% decline predicted by economists.
The sharp drop in April sales followed an equally sharp 5.8% increase in March, according to the department’s upwardly revised figures. Compared to last year, sales of new homes in April decreased by 2.3%.
Although it appears that interest rate hikes are now having an effect on the new home market, sales are still at very high levels. March’s revised figure was the second best ever.
However, economists in general expect new home sales to continue to slip this year due to the significantly higher mortgage rates.
The region where sales declined the most was the Midwest, at 15.5%. Sales dropped 11.5% in the West and were down 0.7% in the South. The Northeast actually increased by 8.6%.
It’s also interesting to note that, despite the overall slowdown in sales, the average price of a new home increased in April by $5,700 to $208,000.
— Greg Mazurkiewicz