Sales of new U.S. homes are on a surprising upswing, even as mortgage rates and the number of unsold properties increase. Still, homebuilders remain pessimistic about the coming months.
April new home sales totaled a seasonally adjusted annual rate of 743,000, meaning that many homes would change hands over the next 12 months at this pace, according to a report released Friday by the U.S. Census Bureau and the Department of Housing and Urban Development. The rate, the highest since February 2022, is 10.9% above the March figure and 3.3% above the same month last year.
The report comes a day after the National Association of Realtors said last month's existing home sales were the lowest for an April since 2009. Also Thursday, Freddie Mac announced that mortgage rates increased again, a psychological jolt to buyers.
The new data from the government shows the new home market has been a relatively smooth spot in a choppy year for housing, said Odeta Kushi, deputy chief economist at First American, in an email.
"Builders have various tools at their disposal — such as buydowns, incentives and design flexibility— to attract hesitant buyers," she said. "Most importantly, pent-up demand remains robust."
But Kushi and other analysts point out that builder sentiment is at the lowest level since 2023 as uncertainty related to tariffs and the broader economy are keeping some consumers from jumping into the market. The supply of completed but unsold homes continues to rise.
Arlington, Texas-based D.R. Horton, the nation's largest homebuilder by sales and revenue, recently lowered its full-year earnings predictions by nearly $3 billion and dropped home sales expectations by 5,000 for the year.
What's more, Kushi noted that the Friday home sales report does not adjust figures to account for sales contract cancellations. There’s the risk that the data may be overestimated, given higher mortgage rates in April and May and recent reports of buyers backing out of deals, she said.
“The April new home sales figure appears to be an anomaly, as builder sentiment moved markedly lower in May,” said Buddy Hughes, chairman of the National Association of Home Builders, in a statement. “A more reliable look would be the year-to-date figures, which show new home sales are down 1.2% on elevated interest rates, ongoing policy uncertainty and rising construction costs.”
The seasonally adjusted estimate of new houses for sale at the end of April was 504,000, down 6% from March but 8.6% higher than April 2024, according to the government data.
The supply of completed homes for sale is the highest in 16 years, noted Nancy Vanden Houten, lead economist at research firm Oxford Economics.
"The buildup of unsold, completed inventory will weigh on single-family housing starts," she said in a statement.
Meanwhile, the median sales price of new houses sold in March was $407,200, up 0.8% from March but 2% below April 2024. It was the fourth consecutive price decline from the prior year period.
In this case, the median number means half of the homes sold for more than $407,200 and half sold for less.
The NAHB defines a new home sale as when a buyer signs a contract or a builder accepts a deposit. The home can be in any stage of construction, from not started to complete.