Rising mortgage rates and economic weakness are beginning to weigh on the U.S. housing market.
Sales of new single-family homes tumbled to a two-year low in April as higher mortgage rates and record prices squeezed first-time buyers out of the housing market. New home sales plunged 16.6% to a seasonally adjusted annual rate of 591,000 units last month, the lowest level since April 2020. Sales dropped 5.9% in the Northeast, and tumbled 15.1% in the Midwest. They plummeted 19.8% in the densely populated South, and decreased 13.8% in the West.
The median new house price in April soared 19.6% from a year ago to a record $450,600. The average house price surged at a much faster 31.2% to $570,300.
Last week, the National Association of Realtors (NAR) reported that existing home sales dropped to the lowest level since the onset of the COVID-19 pandemic. NAR Chief Economist Lawrence Yun said he expects sales to decline further. Average rates on 30-year fixed-rate mortgages are now firmly above 5%, for the first time since 2011.
Tomorrow, investors will get the latest pending home sales data, which measures housing contract activity based on signed real estate contracts.