New home sales increased for the seventh straight month in April due to low inventory pushing an increase of demand into the new construction market.
According to the latest data from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau, new home sales rose to a rate of 683,000, 4.1% above March’s revised rate of 656,000. Sales are also 11.8% above last year’s revised rate of 611,000, demonstrating the heavily increased demand of new construction due to current inventory challenges.
“A lack of existing inventory supported sales of newly built, single-family homes in April,” said Alicia Huey, chairman of the National Association of Home Builders (NAHB). “Even more encouraging, we are seeing sales growth in the more affordable price ranges of $200,000 to $400,000.”
Regionally, sales grew 11.8% to 76,000 in the Midwest and 17.8% to 443,000 in the South. On the other hand, the Northeast saw a 58.6% drop to 24,000 and the West saw a 9.1% drop to 140,000 in sales. On a year-to-date basis, new home sales fell in all regions, down 19.2% in the Northeast, 9.8% in the Midwest, 0.7% in the South and 27.5% in the West.
The median new home sales price was $420,800, while the average sales price was $501,000, both down from March’s median of $449,800 and average of $562,400. The report also showed growth in the lower price ranges, with 9,000 sales in the $200,000 – $299,999 price range compared to just 4,000 sales a year prior. The $300,000 – $399,999 price bracket grew by 14,000 sales in that same timeframe.
“April saw an increase in new home sales as buyers sought new construction even as builders struggle to keep up with demand because of a shortage of distribution transformers and skilled construction workers,” said NAHB Chief Economist Robert Dietz. “Sales for 2023 thus far are still down 9.7% on a year-to-date basis due to elevated interest rates, and sales may weaken in the months ahead given the recent rise in interest rates.”
There were 433,000 new houses for sale at the end of April, representing a 7.6 month supply (a measure near six months is considered balanced).
Bright MLS Chief Economist Dr. Lisa Sturtevant commented that “This spring, new home sales are a more important part of the market than they would be in a more typical year. While sales of new single-family homes typically form less than 10% of national home sales, this April, the share increased to about 14%.”
For the full report, including data tables, click here.
