The inventory shortage, high prices and rising interest rates have finally bitten.
Single-family home sales fell sharply by 16.6% in April to a seasonally adjusted annualized rate of 591,000, according to Census Bureau data released Tuesday.
That was the slowest rate of sales since April 2020 following business closures in the wake of the earliest days of the COVID-19 pandemic.
What’s more, new home sales in March were revised downward significantly from 763,000 to 709,000, the Census Bureau said.
“The new home sales report released today by the Census Bureau clearly points to a housing market that has turned,” said Doug Duncan, chief economist at Fannie Mae.
Mortgage rates have risen 200 basis points since the end of 2021, putting pressure on existing home sales, mortgage applications, and homebuilder confidence, he said.
“‘A sharper downturn in residential investment is now underway, and we will likely be revising downward our near-term home sales forecast.'”
— Doug Duncan, chief economist at Fannie Mae
Economists polled by The Wall Street Journal had forecast sales to take place at a 750,000 annual rate, although the report can be volatile and subject to revisions.
“However, today’s new home sales report is the sharpest indicator yet, with sales coming in well below both our own and consensus expectations,” Duncan said.
“The sales pace in April was similar in level to the slowdown that occurred the last time the Federal Reserve engaged in a tightening regimen in 2018,” he added.
“A sharper downturn in residential investment is now underway,” the Fannie Mae
economist said, adding that he’ll revise downward his own sales projections.
A separate report released Tuesday by Realtor.com suggested that people are prepared to buy and sell homes at “more approachable price points.”
George Ratiu, senior economist and manager of economic research at Realtor.com, said the report “offers hope” for seller-buyers.
(Realtor.com is operated by News Corp subsidiary Move Inc., and MarketWatch is a unit of Dow Jones, which is also a subsidiary of News Corp.)