The great housing inventory divide: New construction vs existing-homes
Sales of new single‐family homes in April in the U.S. jumped 4% month-over-month and 12% year-over-year, thanks to low inventory of existing-homes and robust sales in the South and Midwest regions which helped offset declining sales in the Northeast and West.
New home sales in April were at an annual rate 683,000, the same number that was estimated for March, but which was later revised to 656,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development.
The median sales price of new single-family homes in April declined to $420,800 from a median price of $455,800 in March. The median home price in April of 2022 was $458,200.
“The good news for inflation is that the median price of new homes sold came down in April after four consecutive monthly increases,” says Raymond James' Chief Economist Eugenio Aleman.
Homes It must be that Southern Charm! These areas in the South are topping the housing index
Location, location: Is it better to rent or buy? The best house prices vary city to city
The inventory of new houses for sale at the end of April stood at 433,000, which represents a supply of 7.6 months at the current sales rate. This stands in sharp contrast to inventory of existing homes, which stands at 2.6 months of supply.
One reason for the limited supply of homes has been the sub-5% mortgage interest rates that 85% of current mortgage holders are locked in to, which discourages current homeowners from selling their home and buying another at today’s elevated interest rates.
“This spring, new home sales are a more important part of the market than they would be in a more typical year,” says Lisa Sturtevant, chief economist for Bright MLS. "In April, new single-family home sales were about 14% of total home sales nationwide. Typically, sales of new single-family homes account for less than 10% of all sales transactions, and the last time the new home share was this high was back in 2005.”
In March, 33% of homes listed for sale were new homes in various stages of construction. That share from 2000-2019 was a 13% average, according to the National Association of Home Builders.
Where have home prices dropped the most in the US?
Home prices in the Northeast and the West were down both month-over-month and year-over-year. Meanwhile, new home sales in the South and the Midwest were on an upward trajectory.
New single-family homes sold in the Northeast dropped 59% compared to March of this year and 47% compared to April of last year. In the West, sales of new homes were down 9% compared to March of this year and down by 3% compared to April of last year.
Homes sold in the Midwest, meanwhile, increased 12% compared to March of this year and were up 21% compared to April of last year. In the South, new home sales were up 18% in April compared to March of this year and up 23% compared to April of last year.
Swapna Venugopal Ramaswamy is a housing and economy correspondent for USA TODAY. You can follow her on Twitter @SwapnaVenugopal and sign up for our Daily Money newsletter here.
This article originally appeared on USA TODAY: Housing market shows growing number of homes sold are newly constructed
