A larger-than-forecast decline in new-home purchases in April from the strongest pace in almost a decade indicates a pause in demand in the midst of the busy spring selling season, government data showed Tuesday.
Single-family home sales decreased 11.4% to a 569,000 annualized pace (the median forecast called for a 610,000 rate). The median sales price of a new house dropped 3.8% from April 2016 to $309,200. The supply of homes rose to 5.7 months, the highest since September 2015, from 4.9 months. There were 268,000 new houses on the market at the end of April, the most since July 2009.
While new-home sales only account for about 10% of the residential market, the broader housing picture has remained bright with solid job growth and modest boosts to wages. A post-election surge in mortgage rates has subsided, allowing would-be buyers a little more breathing room while an increase in inventory gives them more options. The real pace of demand is probably in between the March and April rates.
The new-home sales report includes annual revision of data going back to January 2015. The drop in demand was led by a 26.3% slump in the West, the most since October 2010, after an 11.8% jump in March. Sales fell in other three regions as well. The March reading for the U.S. was revised to a 642,000 pace, the strongest since October 2007, from a previously estimated 621,000.
The Commerce Department said there was 90% confidence that the change in sales last month ranged from a 0.9% drop to a 21.9% decrease, underscoring the volatility of the data. New-home sales are tabulated when contracts are signed; existing-home sales are based on contract closings, for which April data are due for release Wednesday from the National Association of Realtors.
