U.S. new-home sales plunged in April as continued increases in home prices and interest rates priced out many would-be homebuyers. 

The rate of new single-family home sales fell 16.6% from March’s revised number to a seasonally adjusted, annual rate of 591,000, while the median sales price jumped to $450,600 from March’s revised median house price of $435,000, the U.S. Census Bureau and the U.S. Department of Housing and Urban Development reported.     

On a year-over-year basis, the pace of new-home sales in April was down 26.9%.   

“New-home prices show their ‘downside stickiness,’” First American deputy chief economist Odeta Kushi said in a press release. “Prices climbed nearly 20% on a year-over-year basis and reached a record high, despite the decline in sales.” 

The seasonally adjusted estimate of new homes for sale at the end of April was 444,000, representing a supply of 9 months at the current sales rate, according to a press release. In March, there were 410,000 homes for sale, representing a 6.9-month supply.      

Home builders will likely slow construction in coming months, Kushi said, referring to the increase in months’ supply. 

“The new-home market is sensitive to rising rates,” Kushi said. “While builders are facing some relief with material costs, buyers are faced with much higher borrowing costs. This is pricing out many new-home buyers, which will continue to have a slowing effect on the new-home market.” 

By region, the number of new-construction homes sold was down across the board, led by the South with a 19.8% monthly drop and followed by the Midwest with a 15.1% drop, the West with a 13.8% decline and the Northeast with a 5.9% decrease.  

“The market continues to feel impacts of geopolitical turmoil and supply chain issues, yet millennial households continue to demand for-sale housing, and many are migrating from high-cost coastal markets to high-growth Sunbelt markets where builder inventory is higher,” RCLCO Real Estate Consulting principal Kelly Mangold said. “The for-sale housing market has remained a strong performer during the entirety of the pandemic, and despite the somewhat uncertain economic conditions, demand for additional new housing remains strong.”