Pent up demand, drop in prices causes surge in US new home sales

Robert Besser
27 May 2023, 04:20 GMT+10

Sales of new single-family homes in the US rose to a 13-month high in April
This has been boosted by an ongoing shortage of previously owned houses on the market and a considerable drop in prices from last year's record levels
Confirming data released last week, a report from the US Commerce Department reported a surge in permits for future single-family housing construction

CHICAGO, Illinois: Boosted by an ongoing shortage of previously owned houses on the market and a considerable drop in prices from last year's record levels, sales of new single-family homes in the US rose to a 13-month high in April.

Confirming data released last week, a report from the US Commerce Department reported a surge in permits for future single-family housing construction.

Amid a 10-month high in confidence among homebuilders in May, the housing market has not been affected by a recent tightening in credit conditions, despite being the sector hit hard by the Federal Reserve's most rapid interest rate hikes since the 1980s.

"The evidence continues to accumulate that the housing market may have largely adjusted to the higher level of mortgage rates, but the decline in the median home price is consistent with the hypothesis that home builders may be tailoring the construction of new homes towards first-time buyers," said Conrad DeQuadros at Brean Capital in New York, as quoted by Reuters.

In April, new US home sales rose 4.1 percent to a seasonally adjusted annual rate of 683,000 units, the highest since March 2022. March's sales pace was revised lower to 656,000 units, compared to the previous prediction of 683,000.

The US government also revised its sales, inventory and months' supply data going back to January 2018.

Meanwhile, Reuters reported economists forecasting new home sales, which make up a small proportion of US home sales, would fall to a rate of 665,000 units. In April, sales recovered 11.8 percent year-on-year.

Also in April, the median new house price was $420,800, 8.2 percent less than last year when home sales were concentrated in the $300,000 to 499,000 price range.

Data from the National Association of Realtors showed that the inventory of existing homes remains 44 percent below its pre-pandemic levels.

Last week, the US said single-family building permits increased to a seven-month high in April.

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