US new home sales drop by 6.9% despite low mortgage rates

New home sales in the US fell for the 14th straight month.

US new home sales dropped in April even though mortgage rates are low and US housing construction rose in April. The US Commerce Department reported that single-family homes sold at a seasonally adjusted annual rate of 673,000 units in April, plummeting from 723,000 in March.

Why did US new home sales fall in April?

US new home sales fell in April because of a decline in sales of homes worth less than $300,000. Those homes are usually purchased by first-time or middle-class homebuyers, but more affordable houses on the market caused new home sales to drop. New home sales fell most in southern, midwestern, and western US states.

Can US new home sales improve?

Though US new home sales declined, Lawrence Yun, the National Association of Realtors' chief economist, said that a strong job market should eventually cause an increase in new homeownership.

‘First, we are seeing historically low mortgage rates combined with a pent-up demand to buy, so buyers will look to take advantage of these conditions,’ said Yun.

‘Also, job creation is improving, causing wage growth to align with home price growth, which helps affordability and will help spur more home sales,’ added Yun.

Sam Khater, economist for mortgage loan company, Freddie Mac, also has an optimistic outlook about the US housing market. He wrote about the expectation of robust new home sales in the summer in a monthly report.

‘Our outlook for the housing market remains largely unchanged. We still expect stronger home sales and housing starts in the coming months due to favourable market conditions and accelerating wage growth,’ wrote Khater.

IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.

Please see important Research Disclaimer.

European Central Bank meeting

Learn about how the ECB meeting affects interest rates and price stability ahead of the next announcement on 24 October 2019.

  • How might the next meeting affect the markets?
  • What are the key rate decisions to watch?
  • Why is the Governing Council announcement important for traders?

Live prices on most popular markets

  • Forex
  • Shares
  • Indices
Sell
Buy
Updated
Change
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Sell
Buy
Updated
Change

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

Sell
Buy
Updated
Change
-
-
-
-
-
-
-
-
-
-
-
-
China 300
-
-
-
-

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.

The Momentum Report

Get the week’s momentum report sent directly to your inbox every Monday for FREE. The Week Ahead gives you a full calendar of upcoming key events to monitor in the coming week, as well as commentary and insight from our expert analysts on the major indices to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.