New home sales plummet as recession continues unabated
Sales of new homes in the U.S. plummeted last month at the same time mortgage interest rates began to rise. When you add this to skyrocketing prices on homes throughout the country, the market is feeling the beginning raindrops of recession, which the current administration refuses to acknowledge.
The sale of new homes dropped by almost 17 percent in April versus March numbers, according to the Census Bureau information that was released a week ago. When you compare the numbers to April last year, they were down almost 30 percent.
Robert Dietz, the chief economist for the National Association of Home Builders, was willing to call it as he sees it and said that the drop in April for new homes was a “clear recession warning.”
The median price of a new home sale in April was a whopping $450,600. That is about 20 percent higher than this time in April 2021, and the average interest rate on a 30-year fixed rate mortgage was 5.3 percent, according to Freddie Mac. That figure is up from 3.2 percent from the beginning of January 2022.
Dietz said that the combination of higher prices and increased interest rates was going to create a clear slowing of the housing market.
“While the nation needs additional housing, home sales are slackening as tightening monetary policy continues to put upward pressure on mortgage rates and supply chain disruptions raise construction costs,” Dietz said.
All of these numbers mean that the market is going to be flooded with homes people can’t afford to buy. In fact, there were an estimated 444,000 new homes on the market in April. That is a nine-month supply at the current sales rate. This is compared to a 4.7-month supply at this time in 2021.
America has now seen four consecutive months of dropping sales of new homes. Consumers are caught in the grip of inflation. Retailers like Walmart and Target reported fewer earnings last week than was estimated by Wall Street.
George Ratiu, a senior economist and manager of economic research at Realtor.com, said, “New home sales are feeling the impact of high construction costs and surging mortgage rates, which are keeping many buyers away this spring. While new construction gained favor with many would-be buyers over the past two years due to the extreme shortage of existing homes for sale, the rising cost of a new home is now pricing many people out of the market.”
Ratiu noted that the median price of a new home was 21 percent higher than last year and that meant that monthly mortgage payments were approximately $660 higher, which is a 52 percent increase from today’s average mortgage rate.
During the pandemic, the housing market was stable in our economy. But now it is seeing the same issues that the rest of the economy was hit with. We have rising prices and a declining ability to pay them.
Consumers across the country are becoming more convinced that this is all part of King Biden’s “Great Reset” that will force the populace into government housing projects, essentially killing the great American dream of home ownership and leading Americans into servitude under an authoritarian government.