New Home Sales Increase Again in April Builders Continue to Benefit from Low Resale Inventory

Source: Economics Group of Wells Fargo Bank, N.A.

Summary

Buyers Look to New Construction as Existing Supply Remains Scarce

• New home sales rose 4.1% to a 683,000 annual rate in April, the second consecutive monthly uptick. Stabilizing buyer demand has lifted the pace of new home sales 25.8% above the recent bottom hit in July 2022 (543,000).

• Downward revisions took some shine out of March’s surge, however. New home sales in March were revised down from the originally reported 9.6% leap to a more modest 4.0% rise. That said, the pace of new home sales in April remained the highest since March 2022 and 11.8% higher than its pace one year ago.

• The average 30-year fixed mortgage rate dropped from 6.7% the first week of March to 6.3% the first week of April, improving affordability for buyers.

• Builder incentives and low resale supply are nudging buyers toward new construction. New home inventory made up 32.2% of all homes available for sale in April, a slight dip from March (33.4%) but elevated far above the 17.8% average in 2019.

• Use of builder incentives and price cuts are becoming less common as housing demand stabilizes, but they remain an important factor attracting buyers. For example, the May

NAHB builder sentiment report indicated that over half of builders (54%) offered incentives to move sales and 27% reported cutting prices to lure buyers, a lower portion than in recent months. READ FULL ARTICLE >>