US New Home Sales Drop 16.6% In April: Govt

US new home sales plunged 16.6 percent in April, even as prices continued to climb, according to government data released Tuesday

Washington, (UrduPoint / Pakistan Point News - 24th May, 2022 ) :US new home sales plunged 16.6 percent in April, even as prices continued to climb, according to government data released Tuesday.

Sales of new single-family homes fell to an annual rate of 591,000, seasonally adjusted, with declines seen nationwide, the Commerce Department reported.

The result was far worse than analysts had projected, and compounded by the downward revision to the sales figures for March.

Last month's sales pace was a 26.9 percent drop compared to April 2021, the report said.

However, even amid the rise in borrowing costs that is cooling demand from homebuyers, prices continued to rise in April, reaching a median of $450,600 from $435,000 in the prior month.

Home sales have been booming throughout the Covid-19 pandemic helped by the popularity of working from home and increased household savings, which prompted many families to move out of congested urban areas and purchase larger houses.

But the surge in demand sent prices soaring as potential homebuyers competed to snap up properties -- even paying cash -- in an increasingly tight market hindered by global supply chain snarls that held back new construction.

The Federal Reserve has begun raising interest rates aggressively to cool the economy and rein in the highest inflation in four decades, which is pushing borrowing costs higher.

"Higher mortgage rates and lofty prices are making housing more expensive, particularly for first-time buyers," said Oren Klachkin, the lead US economist at Oxford Economics. "Looking ahead, income gains won't keep up with rising borrowing costs and elevated home prices, pushing down affordability and pressuring home sales." As the sales pace dropped sharply, the supply of homes on the market rose last month, jumping to a nine months supply from 6.9 months in April, the report said.

"Builders will add to the housing stock, but not sufficiently enough to meaningfully tilt housing market dynamics in favor of buyers," Klachkin said.

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