US new home sales fell more than expected in April as incentives for builders failed to motivate potential buyers at the start of the spring selling season.
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Purchases of new single-family homes fell 6.2% from March to an annualized pace of 622,000, according to government data released Thursday. Economists expected a rate of 660,000, based on the average estimate in a Bloomberg survey.
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The drop in sales figures in April indicates that the country is still struggling to emerge from a three-year housing crisis. Despite builders’ efforts to build cheaper homes and offer various incentives, mortgage rates are rising and many lower-income Americans still view the housing market as unaffordable.
Housing construction, which has negatively impacted economic growth throughout 2025 and into the first quarter of this year, may remain subdued in the coming months as builders focus on reducing inventories.
The new home sales report showed that the number of homes for sale in April fell to 489,000 from a year ago. At the latest sales pace, the supply of new homes would take 9.4 months.
The report shows that the average sales price of a new single-family home rose 2.2% in April from a year ago, to $422,500. While fewer homes priced under $300,000 were sold, more contracts were signed for homes in the $400,000 to $500,000 range.
A continued price increase will worsen affordability problems in the wake of a rise in mortgage rates of more than half a percentage point since the start of the war against Iran.
Sales fell in three of the four regions. In the South, the largest home sales region in the US, the number of contract signings fell by almost 10% in April. Sales fell 25% in the Midwest to the lowest level in more than a year. In the West, they rose 18.7% to the fastest pace since October.
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Sales of new homes are seen as a more timely measurement than purchases of existing homes, which are calculated when contracts close. However, the data is volatile month to month.
The government report found that 90% believed the change in new home sales ranged from a fall of 19% to an increase of 6.6%.