May 23, 2025

New home sales jumped 10.9% in April to 743 thousand after  having risen 2.6% in March.  In the past year new home sales have risen 3.3%.   New home sales can be volatile from month to month, but it seems clear that they are in a gradual uptrend.

Mortgage rates are  now 6.9%.  If inflation remains relatively steady mortgage rates should remain at about that level at the end of the year.

Home prices rose 0.9% in April to $407,200 after having fallen 2.1% in March.  They tend to be rather bouncy from from to month but over the past year new home prices have declined 2.0%.

Housing affordability currently stands at about 103 which means that median-income earning consumers have 3.0% income required to purchase a median-priced home.  If mortgage rates are fairly stead, home prices are fairly steady, and income continues to climb, affordability should rise as the year progresses, and that median income earning family should have about 10% more income than required by the end of this year.  This should provide some stimulus for both new and existing home sales.

As a result, we look for new home sales to rise from 743 thousand currently to 790 thousand by the end  of 2025.

Stephen Slifer

NumberNomics

Charleston, SC