U.S. new-home sales plunge to lowest since start of pandemic

Rebecca Noble/Bloomberg

Sales of new U.S. homes plummeted in April by the most in nearly nine years, dented by the combination of high prices and a steep climb in mortgage rates.

Purchases of new single-family homes decreased 16.6% to an annualized 591,000 pace, the weakest since April 2020, government data showed Tuesday. The figure fell well short of all estimates in a Bloomberg survey of economists, which called for a 749,000 rate. 

Home ownership is becoming increasingly out of reach for many Americans, as a rapid run-up in mortgage rates collides with record prices. The average rate on a 30-year mortgage was 5.25% last week, up from around 3% at the end of 2021, Freddie Mac data show.

A separate report showed a measure of homebuilder sentiment fell in May for a fifth straight month amid concerns over rising construction costs and a slowdown in demand.