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New Home Sales: Lower Amid Higher Mortage Rates

April 26, 2022
Bottom Line:   New home sales fell sharply in March as mortgage rates hampered affordability. But sales in January and  February were revised sharply higher. The net of the revisions was surprisingly strong, confirming that the housing market remained very tight even as mortgage rates accelerated higher. Through the 1st Quarter, sales proved resilient to higher rates, and prices continued to move higher. That said, inventory levels of new home sales were trend higher, back over six months, historically a balanced level. Overall, new home sales remain robust, but the trend rate of gains has plateaued amid sharply higher mortgage rates.
New Home Sales FELL by 8.6% to 763k, after the prior month was revised  higher to 839k. This compared with market expectations for a decline to 768k, from the unrevised February level of 772k.
Sales are now 12.6% BELOW their year-ago level.  The Inventory of Homes Available for Sale ROSE by 3.8% to 407k. Inventories are now 33.4% ABOVE their year-ago.
Combined with the decline in sales, the Months' Supply increased to 6.4 months from 5.6 months. This is modestly ABOVE a normal level of 6.0 months.
Home Prices
ROSE with median prices 21.4% ABOVE their year-ago level and with average prices 26.3% ABOVE their year-ago level.
Article by Contingent Macro Advisors