With Higher Mortgage Rates in Place, Home Sales See an April Drop, Says Report

The nation’s newly built, single-family market continues to face challenges, with the most recent figures showing a nearly 5% sales drop in that sector.

According to just-released figures from both the Census Bureau and Department of Housing and Urban Development, single-family home sales in April had declined to around 634,000. That figure is down from March’s 665,000, and substantially off from where things stood a year ago at 687,000.

Continues the report: “The median sales price of new houses sold in April 2024 was $433,500.”

Sales activity, in fact, is now at its lowest level since the Covid 19 onset in April of 2020.

Industry experts say that the continued persistence of higher mortgage rates is proving an ongoing downer for the market. “In the last four weeks mortgage rates have been above 7%, and this is clearly causing many potential home buyers to sit on the fence,” remarked Carl Harris, the chairman of the National Association of Home Builders.

In a statement, Harris continued: “However, in the weeks and months ahead, we expect mortgage rates to fall below 7%.”

The influence of “moderating rates, along with a dearth of existing inventory, should help new home sales recover as new construction will be needed to meet the demand for homes, especially during this crucial spring/summer season,” added Harris.

Similarly, Lawrence Yun, chief economist with the National Association of Realtors, remarked: “Home prices are hitting record highs, but the pace of gains should decelerate with more supply.”

Yun, however, noted that the “Federal Reserve’s anticipated rate cut later this year should lead to better conditions, with improved affordability and more supply.”

The consensus for a drop is widespread, notes the publication Forbes: “Many housing market experts expect mortgage rates to recede over 2024, but that largely depends on when the Federal Reserve decides to cut interest rates.”

The Fed has largely been keeping rates to their highest levels in more than 20 years in the hopes of “grinding down on the economy enough to get high inflation fully under control,” says the Boston Herald.

Prospects for a rate cut aren’t likely, continues the publication, until the Fed “has greater confidence that price increases are slowing to its 2% target.”

​By Garry Boulard

Image Credit: Courtesy of Pixabay ​

---