Sales of newly built homes tank in April, as prices and interest rates rise

Sales of newly built homes tank in April, as prices and interest rates rise


A pile of lumber at a home under construction at the Cold Spring Barbera Homes subdivision in Loudonville, New York, US, on Wednesday Nov. 8, 2023. 

Angus Mordant | Bloomberg | Getty Images

Sales of newly built homes dropped 4.7% in April compared with March, and fell a larger 7.7% from the prior year, the U.S. Census said Thursday.

March sales were also revised significantly lower.

Higher mortgage rates are clearly hampering sales. The monthly reading is based on signed contracts, so it reflects people shopping during the month and inking deals based on current rates.

The average rate on the 30-year fixed mortgage was in the high 6% range at the end of March, but then shot up to 7.5% during April, cutting into affordability.

Adding to that, the median price of a new home sold in April was $433,500, 4% higher than it was in April 2023. Some of that is due to the mix of homes selling, which is mostly on the higher end of the market. Those buyers are not as influenced by mortgage rates, as they often use all cash.

Builders say they cannot lower prices due to high costs for land, labor and materials. The big production builders have been buying down mortgage rates to help boost sales, but they are able to do that because of their size. D.R. Horton and Toll Brothers reported strong earnings in their latest quarters, beating expectations and citing growing demand due to low supply in the resale market.

“For all the happy talk from the big builders (who are taking market share), the entire new build industry is selling new homes at a pace below the 5 yr average,” noted Peter Boockvar, chief investment officer at Bleakley Financial Group and a CNBC contributor.

In the first quarter of 2024, 38% of a median household income nationally was needed to make the mortgage payment on a median-priced new single-family home, according to a new index launched Thursday by the National Association of Home Builders and Wells Fargo. Low-income families, which it defines as those earning just 50% of the area’s median income, would have to spend 77% of their earnings to pay for the same new home. 

Prices continue to rise for both new and existing homes due to a lack of supply. There is very little available for sale on the lower end of the resale market. While the number of newly built homes continues to rise, up 12% year over year, new homes come at a price premium and are out of range for lower-income buyers.

“With a nationwide shortage of roughly 1.5 million homes, the lack of housing units is the primary cause of growing housing affordability challenges,” said Robert Dietz, NAHB’s chief economist. “Policymakers at all levels of government need to enact policy changes that will allow builders to construct more homes, such as speeding up permit approval times, providing resources for skilled labor training and fixing building material supply chains.” 

Don’t miss these exclusives from CNBC PRO



Source

Nike to lay off about 1% of corporate staff in its latest effort to refocus the business
Business

Nike to lay off about 1% of corporate staff in its latest effort to refocus the business

A Nike store in Hanoi, Vietnam, on July 3, 2025. Nhac Nguyen | Afp | Getty Images Nike is planning another round of layoffs as part of CEO Elliott Hill’s efforts to realign the business and get it back to growth, CNBC has learned.  The cuts will impact less than 1% of Nike’s corporate staff. […]

Read More
Pending home sales tick lower in July as canceled contracts spike
Business

Pending home sales tick lower in July as canceled contracts spike

Signed contracts to buy existing homes, known as pending sales, were weaker in July compared with June, and were canceled at the highest rate since at least 2017. The monthly pending home sales index from the National Association of Realtors dropped 0.4% in July from June, but was still 0.7% higher from July of last […]

Read More
Best Buy reports modest sales recovery, but says tariffs are complicating its turnaround
Business

Best Buy reports modest sales recovery, but says tariffs are complicating its turnaround

Logo of Best Buy displayed outside a Best Buy store in Edmonton, Alberta, Canada, on March 22, 2025. Artur Widak | Nurphoto | Getty Images Best Buy surpassed Wall Street revenue and earnings expectations for its most recent quarter on Thursday, but stuck with its full-year forecast, citing tariff uncertainty. The consumer electronics retailer said […]

Read More