New home sales wane in April
|Summary
Higher rates headwind for new Home Sales in April
New home sales dropped 4.7% during April. Although a pullback was expected, the drop was a bit sharper than anticipated. The weakness in new home sales can largely be explained by early April's spurt higher in mortgage rates. Rising inventory levels in the resale market appears to be another factor weighing on sales.
Looking ahead, builders still enjoy several advantages that are likely to support sales this year. Although slightly improved, existing home inventories remain low, which should continue to push buyers into the new home market where inventories remain plentiful. Builders also appear willing to reduce prices and offer incentives to stabilize demand. Builders surveyed by NAHB stepped up their use of price cuts and mortgage rate buydowns in May, which could potentially help to bring buyers back from the sidelines.
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