The US housing market faltered in April after rate hikes

US new home sales in April fell at their sharpest rate in almost nine years, hurt by a combination of high prices and a surge in mortgage rates.

New single-family home purchases fell 16.6 percent to an annualized 591,000, the weakest reading since April 2020, US government data showed yesterday.

The number fell far short of any estimates by a Bloomberg poll of economists, which called for a rate of 749,000.

Home ownership is becoming increasingly unaffordable for many Americans as soaring mortgage rates collide with record prices.

The average interest rate on a 30-year mortgage was 5.25 percent last week, up from around 3 percent at the end of 2021, data from Freddie Mac shows.

A separate report showed that homebuilder sentiment fell for the fifth straight month in May amid concerns about rising construction costs and a slowdown in demand.

The New Home Sales report, produced by the Census Bureau and the Department of Housing and Urban Development, showed that the median new home selling price rose 19.6 percent year over year to a record $450,600.

At the end of the month, 444,000 new homes were for sale, the most since 2008.

However, almost all of them were not yet completed.

At the current rate of sales, it would take nine months to exhaust the supply of new homes.

That compares to 6.9 months last month and 4.7 months a year ago.

The number of homes sold in April awaiting construction — a measure of the backlog — rose slightly from the previous month to 185,000, the report showed.

New home purchases account for about 10% of the market and are charged when the contract is signed.

They are considered a more timely barometer than the purchase of old buildings, which are calculated when the contract is concluded.

Existing home sales fell in April to their lowest level since June 2020 amid rising affordability concerns.