New home sales fell 4.7% from March to an annual rate of 634,000, according to a Thursday report from the, which tracks daily changes in rates. That is down from a recent peak of above 8%, although is still far higher than in the years prior to the pandemic.
The past few years have seen a unique dynamic in the housing market because of the higher mortgage rates. Many people are holding on to their existing homes and waiting to sell until mortgage rates are lower, creating a shortage of existing homes for sale. At the peak of the pandemic, the Federal Reserve cut its interest rate target to near zero, and mortgage rates plunged to very low levels. In early 2021, people were locking in 2.5% mortgages — the lowest level in postwar modern history.
The low rates prompted a surge in homebuying and investment, generating an increase in home construction. But very quickly, the dynamic began shifting when inflation increased, and the Fed hiked interest rates in response, thus pushing mortgage rates to the highest level since the turn of the century.to a seasonally adjusted annual rate of 4.14 million, the National Association of Realtors reported on Wednesday. The pace of existing home sales is nearly 2% from the year before.
In a bright spot for the housing market, housing starts, the change in the number of new residential buildings that began construction, from March to this past month. They are now at a seasonally adjusted annual rate of 1.44 million. From April 2023, they fell 2%.
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