WASHINGTON, May 28 (Reuters) – Sales of new U.S. single-family homes fell in April as the boost from better weather faded and mortgage rates remained elevated.
New home sales dropped 6.2% to a seasonally adjusted annualized rate of 622,000 units last month, the Commerce Department’s Census Bureau said on Thursday. Sales were weighed down by winter storms in January before bouncing back in February and March as temperatures warmed up.
Sales last month tumbled in the Northeast, South and Midwest, but rose in the West. New home sales, which are counted at the closing of a contract, account for a small share of U.S. home sales and tend to be volatile on a month-to-month basis. They declined 11.3% on a year-over-year basis in April.
The housing market has been constrained by higher mortgage rates. Mortgage rates dropped early this year as mortgage finance agencies Freddie Mac and Fannie Mae expanded purchases of mortgage-backed securities. But they reversed course after the U.S. and Israel began a war with Iran in late February.
The average rate on the popular 30-year fixed-rate mortgage jumped from 5.98% in late February to 6.46% at the start of April, data from Freddie Mac showed. It averaged 6.30% by the end of the month and climbed to 6.51% last week.
With sales slumping, new housing inventory increased to 489,000 units in April from 481,000 units in March.
An oversupply of new homes on the market is also hampering builders’ ability to aggressively break ground on new single-family housing projects.
Single-family housing starts and building permits dropped in April, the government reported last week. Residential investment, which includes home building and sales via brokers’ commissions, has contracted for five straight quarters.
At April’s sales pace, it would take 9.4 months to clear the supply of new houses on the market, up from 8.7 months in March. The median new house price increased 2.2% to $422,500 in April from a year earlier. Most of the homes sold in April were in the $300,000-$799,999 range.
(Reporting by Lucia Mutikani; Editing by Paul Simao)
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