US New Home Sales Fall Sharply in April, Interest Rates Pressure Buying Power
New home sales in the US fell more sharply than expected in April, signaling that the housing market is still struggling to emerge from a nearly three-year slump. Purchases of new single-family homes fell 6.2% from March to an annual rate of 622,000, below the consensus estimate of 660,000, according to data released Thursday (May 28).
This decline occurred despite developers offering incentives to attract buyers at the start of the spring selling season. Rising mortgage rates and affordability issues remain major barriers, especially for lower-income groups who believe home prices remain too high.
On the supply side, the number of new homes available for sale in April fell to 489,000 units compared to a year earlier. At the current sales pace, this stock is equivalent to 9.4 months of inventory, indicating the market remains relatively loose and encouraging developers to focus on reducing inventory rather than aggressively adding projects.
Prices have also not shown any room. The median new home price rose 2.2% year-over-year to US$422,500. Continued price increases are expected to further pressure affordability, especially as mortgage rates are said to have risen more than half a percentage point since the Iran war began, increasing mortgage repayments and reducing purchasing power.
For the market, this data reinforces the "high interest rates are holding back credit-sensitive sectors" transmission channel: housing demand is weakening, builders are holding back construction, and the sector's contribution to growth is at risk of remaining limited in the coming months. (Arl)
Source: Newsmaker.id
