The US experienced a 6% fall in home sales throughout the month of April, partially due to the fact that construction and other additional costs that come with buying a home have been on the rise as the pandemic continues.
The US Census Bureau reported on Tuesday that new residential sales occurred at a seasonally-adjusted annual rate of 863,000 in April. They also reported that the previously published figures for March sales should be decreased to 917,000. This time last year during the pandemic, new home sales were surprisingly up by 48% due to an increase in individuals leaving the city to have more space in the suburbs.
The Bureau also noted that new home sales reports are prone to change within the first month of release as well, and they predict that the new home sales between March and April could be 11.2% larger or smaller than what it is currently.
Sales rates in every part of the country have decreased except for the West, where sales grew by 3.9%; the largest decline occurred in the Northeast with a nearly 14% drop. The inventory of new homes available for sale at the end of April was also significantly lower from March.
Pantheon Macroeconomics chief economist Ian Shepherdson had “projected a larger decline than what occurred, because of trends in mortgage application data. Over time, though — and usually not much time — new home sales gravitate to the pace implied by the trend in mortgage applications. So, absent any other reliable near-time indicators of the pace of sales, we have to expect a steep drop in April.”
Experts believe that the decline in mortgage demand is linked to an increase in property costs, as well as construction and renovation costs. Affordability is obviously a top priority for every working class American right now as we navigate this grey area of the pandemic where half of people are receiving vaccines while the other is refusing.
“The market for new homes is seeing price pressures not just due to the high demand for housing but also because of rising material costs that are driving construction expenses higher.”
“Builders are reluctant to sign sales contracts for houses they haven’t broken ground on because of the possibility that costs will continue to rise, nibbling into profits. So some builders are waiting at least until houses are framed before accepting buyers’ offers. This limits the number of home sales, even as demand remains strong,” ,” said Holden Lewis, housing and mortgage expert at personal-finance website NerdWallet. “
“The market for new homes has benefitted from a near-record low supply of available resale properties, which is sending prices skyward,” said Sal Guatieri, senior economist at BMO Capital Markets.
Eric Mastrota is a Contributing Editor at The National Digest based in New York. A graduate of SUNY New Paltz, he reports on world news, culture, and lifestyle. You can reach him at email@example.com.