The strong momentum in new home sales was also driven by a significant jump in sales in the southern region. Overall, new home sales are trending upward as buyers grapple with low levels of home listings in the existing home sales market.
The US Commerce Department reported on Tuesday that new home sales in the US rose 4.1% in April to an annual rate of 683,000 units, compared to a revised 656,000 units in the previous month.
The figure, which is seasonally adjusted, refers to how many homes would be built over the course of a full year if builders continued to build at the same rate each month.
This jump exceeded Wall Street's expectations. Economists had predicted new home sales would fall to 669,000 units in April.
Homebuilders are building new homes, which is the highest level since March 2022.
February's data was revised sharply. new home sales increased to a revised 656,000 units in March, compared to an initial estimate of a 9.6 per cent increase to 683,000 units.
New home sales figures fluctuate on a monthly basis and are often revised.
The median sales price of new homes sold in April fell to $420,800 from the previous month. Prices have fallen from a peak of $496,800 in October last year. This is also the first year-on-year price decline since 2020.
The supply of new homes for sale fell by 3.8 per cent between March and April, equivalent to a 7.6-month supply.
Regionally, the South led the way in new home sales by 17.8 per cent, but is recovering from a significant drop in the previous month.
Overall, new home sales are up almost 12 per cent compared to last year.
High mortgage rates - Low inventory is killing the housing market as buyers have few options. Builder confidence is high as homeowners feel compelled to wait and hold out for the ultra-low mortgage rates they refinanced during the pandemic.
Builders are gaining an edge on existing homeowners by offering incentives ranging from mortgage rate relief to other freebies to sell, but it is unclear how long this will last. The builders' trade body reported earlier this month that the percentage of builders reducing their home prices fell to 27 per cent in May, down from 30 per cent in April.
In addition, the 30-year rate is a few inches shy of 7 per cent, which could affect the calculations of potential buyers.
What are they talking about?" The broader story is that new home sales rose by roughly 12 per cent last year despite a sharp rise in mortgage rates," Neil Dutta, head of economics at Renaissance Macro Research, wrote in a note.
"Builders continue to benefit from a lack of inventory in the resale market and the space to buy out potential buyers to lower rates," he added.
"New home sales are a more important part of the market this spring than in a more typical year," Lisa Sturtevant, chief economist at Bright MLS, said in a statement.
She added that while sales of new single-family homes typically account for less than 10 per cent of home sales nationwide, that share increased to about 14 per cent in April this year.
