Sales of new single-family houses dropped to the lowest level in four months in March 2022 amidst a rise in mortgage rates, according to the latest data from the U.S. Census Bureau and the U.S. Department of Housing and Urban Development.
“Sales of new single‐family houses in March 2022 were at a seasonally adjusted annual rate of 763,000, according to estimates,” an April 26 press release said. “This is 8.6 percent below the revised February rate of 835,000 and is 12.6 percent below the March 2021 estimate of 873,000.”
Regionally, the West saw the sales of new single-family homes rise by 21 percent in the 12-month period ending March 2022. The Northeast saw an increase of 12.8 percent, while the South and Midwest saw a decline of 24.7 percent and 13.8 percent respectively.
The median sales price of new homes sold in March 2022 was $436,700, up by 9 percent when compared to the previous month’s median sales price of $400,600. The average sales price for March was $523,900, an increase of 2.52 percent from February’s average of $511,000.
There were 407,000 new homes for sale at the end of March, representing a supply adequate for 6.4 months based on the present rate of sales.
“Higher mortgage interest rates and rising construction costs are pricing buyers out of the market, and these higher costs are particularly hurting entry-level and first-time buyers,” said Jerry Konter, chairman of the National Association of Home Builders (NAHB), in an April 19 press release.
“Policymakers must address building supply chain disruptions to help builders bring down construction costs and increase production to meet market demand,” Konter said.
Builder confidence is also suffering.
According to the NAHB/Wells Fargo Housing Market Index (HMI), builder confidence for newly-built single-family homes dropped two points to 77 in April, the fourth straight month of such declines.
“The housing market faces an inflection point as an unexpectedly quick rise in interest rates, rising home prices, and escalating material costs have significantly decreased housing affordability conditions, particularly in the crucial entry-level market,” NAHB Chief Economist Robert Dietz said in an April 18 press release.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) rose to 5.37 percent for the week ending April 22 according to a news release by the Mortgage Bankers Association.
For loan balances greater than $647,200, interest rates climbed to 4.89 percent. For mortgages backed by the Federal Housing Administration, the interest rate was 5.29 percent. Average contract interest rates for 15-year fixed-rate mortgages rose to 4.68 percent.