Major General Al-Tayeb
After the previous month’s better-than-expected numbers, the number of new home sales in the United States declined in April 2024. Worse still, the estimated number of new home sales for the January-March 2024 period was revised downward.
It is not a coincidence, The average and median sales prices recorded for new homes in those months were revised upward. However, the overall trend over the past few months has remained steady.
This combination of factors means that the downward momentum in new home sales has reasserted itself. Our preliminary estimate of the market value of the new home market in April 2024 is $27.24 billion, down about 4.4% since October 2023 and nearly 10% from its pre-Biden December 2020 peak. After adjusting for inflation, the decline of the new domestic market exceeds 23%.
The main reason behind the ongoing downward trend of the new home market is inflation Mortgage rates, which have risen and crossed the 7.0% threshold in recent weeks. Mortgage rates are rising faster than income Reducing relative affordability of new homes, making them out of reach for the majority of American families.
The following charts track the market value of new homes in the United States, the number of new home sales, and their sale prices as measured by time-varying twelve-month averages from January 1976 through April 2024.
Continuing downward sales trend:
Flat trend of prices:
Here’s how to report the effects of rising mortgage rates on home sales:
The surge in mortgage rates has sapped momentum in the housing market. The National Association of Realtors on Wednesday reported a decline in existing home sales in April, while government data last week showed that single-family housing starts and building permits declined last month. Homebuilder confidence deteriorated significantly in May.
The median price of a new home rose 3.9% to $433,500 in April from a year ago. Most of the new homes sold last month were between $300,000 and $499,999.
We’ll take a closer look at how affordable new homes are for the typical American family next week.
References
United States Census Bureau. New historical data for residential sales. Houses sold. (Excel spreadsheets). Accessed 23 May 2024.
United States Census Bureau. New historical data for residential sales. Average and median sales price of homes sold. (Excel spreadsheets). Accessed 23 May 2024.
Original post
Editor’s note: The summary points for this article were selected by Seeking Alpha editors.
