--- title: What Plunging New Home Sales Mean for Buyers and the Economy description: As house prices and mortgage rates rise, the number of new home sales in the U.S. plunged in April 2022, and is down four months in a row. authors: - name: Sarah Hansen role: Senior Writer url: https://money.com/author/sarah-hansen/ bio: Sarah Hansen is a senior writer at Money covering all things personal finance. Previously, she covered economic policy and capital markets on the breaking news desk at Forbes. education: Northwestern University, New York University at_money_since: 2021 articles: 347 covers: - Housing - Banking - Business - Career Advice - Credit - Credit Cards - Economy and Politics - Education - Health and Wellness - Insurance - Investing - Lifestyle - Loans - Mortgages - Personal Finance - Professional Services - Retirement - Shopping - Taxes social: - https://www.linkedin.com/in/sarah-m-hansen/ former_staff: true published: '2022-05-25T19:01:25.000Z' modified: '2024-01-10T13:27:01.000Z' section: Housing tags: - home prices - News word_count: 542 canonical: https://money.com/plunging-new-home-sales-meaning/ type: NewsArticle source: structured-blocks --- > **Disclosure:** We research all brands listed and may earn a fee from our partners. Research and financial considerations may influence how brands are displayed. Not all brands are included. [Learn more](https://money.com/page/disclaimer/). ![Collage of a house with a "For Sale" Sign in-front](https://img.money.com/2022/05/News-2022-April-Home-Sales-Drop.jpg?crop=0px%2C152px%2C2880px%2C1620px&quality=85) Soaring [mortgage rates](https://money.com/current-mortgage-rates/) and high home prices appear to finally be taking a toll on the housing market. Sales of newly constructed homes fell a steep 16.6% in April compared to March, according to [data](https://www.census.gov/construction/nrs/pdf/newressales.pdf) released Tuesday by the U.S. Census Bureau. Compared to a year ago, new home sales are down 26.9%. This past April was the fourth consecutive month of declines, and it had the lowest total for new home sales since April 2020, when economic activity came to a crawl in the early days of the pandemic. The median sale price of a new home was $450,600 in April, according to the Census Bureau, compared to $435,000 the previous month (a 3.6% bump) and $376,600 in April 2021 (a 19.6% bump). A perfect storm of factors including a surge in demand over the past two years, inventory constraints, supply chain issues, rising construction costs and even [remote work](https://money.com/reason-high-home-prices-remote-work/) are what's being blamed for those sky-high prices. “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,” Realtor.com Senior Economist George Ratiu [wrote](https://www.realtor.com/research/new-home-sales-apr-2022/). Existing home sales are also falling, though not as dramatically. Sales fell 2.4% on a monthly basis in April, [according to](https://www.nar.realtor/research-and-statistics/housing-statistics/existing-home-sales) the National Association of Realtors (NAR) — the third consecutive month of declines. And it’s not just home prices that are rising. Mortgage rates [crossed the 5%](https://money.com/todays-mortgage-rates-march-23-2022/) threshold this spring, pushing up the monthly payment on a home with the median asking price for all homes to $2,447 during the four weeks ending on May 15, according to [data](https://www.redfin.com/news/housing-market-update-sellers-rush-to-find-buyers/) from Redfin. That monthly payment is 43% higher than the comparable figure from the same time last year. For hopeful buyers, especially those wading into the market for the [first time](https://money.com/first-time-homebuyer-programs/), homes simply keep getting less and less affordable. So it shouldn't come as a surprise that a majority of Americans thinks that right now is a [bad time to buy a house](https://money.com/bad-time-to-buy-house-poll/). ## The housing market and a possible recession The slump in the number of homes being sold has some experts talking about a slowdown in the economy more broadly. Robert Dietz, chief economist for the National Association of Home Builders, [described](https://eyeonhousing.org/2022/05/new-home-sales-deteriorate-in-april/) the April data as a “clear recession warning.” Others view declining home sales as a sign that things are returning to normal after two years of extraordinary activity. "It looks like more declines are imminent in the upcoming months,” NAR Chief Economist Lawrence Yun [said](https://www.nar.realtor/newsroom/existing-home-sales-retract-2-4-in-april) last week, “and we'll likely return to the pre-pandemic home sales activity." But don’t expect that change to happen overnight, even though more sellers are [dropping their asking prices](https://money.com/more-home-sellers-dropping-asking-prices/) and more buyers are deciding to [sit on the sidelines](https://money.com/tips-waiting-to-buy-house-hot-market/). At the same time, low inventory continues to make for a very competitive market, and homes are still selling quickly to buyers who can afford to pay cash or borrow at today’s rates. ```json { "@context": "https://schema.org", "@graph": [ { "@type": "BreadcrumbList", "@id": "https://money.com/plunging-new-home-sales-meaning/#breadcrumb", "itemListElement": [ { "@type": "ListItem", "position": 1, "name": "Home", "item": "https://money.com" }, { "@type": "ListItem", "position": 2, "name": "Housing", "item": "https://money.com/housing/" }, { "@type": "ListItem", "position": 3, "name": "Housing Market", "item": "https://money.com/housing-market/" }, { "@type": "ListItem", "position": 4, "name": "What Plunging New Home Sales Mean for Buyers and the Economy" } ] }, { "@type": "WebSite", "@id": "https://money.com/#website", "url": "https://money.com", "name": "Money", "publisher": { "@id": "https://money.com/#organization" } }, { "@type": "WebPage", "@id": "https://money.com/plunging-new-home-sales-meaning/#webpage", "url": "https://money.com/plunging-new-home-sales-meaning/", "name": "What Plunging New Home Sales Mean for Buyers and the Economy", "isPartOf": { "@id": "https://money.com/#website" }, "datePublished": "2022-05-25T19:01:25.000Z", "mainEntity": { "@id": "https://money.com/plunging-new-home-sales-meaning/" }, "inLanguage": "en-US", "breadcrumb": { "@id": "https://money.com/plunging-new-home-sales-meaning/#breadcrumb" }, "dateModified": "2024-01-10T13:27:01.000Z" }, { "@type": "NewsArticle", "headline": "What Plunging New Home Sales Mean for Buyers and the Economy", "articleSection": "Housing", "image": [ { "@type": "ImageObject", "url": "https://img.money.com/2022/05/News-2022-April-Home-Sales-Drop.jpg?crop=0px%2C152px%2C2880px%2C1620px&quality=85", "width": 1012, "height": 569, "caption": "News-2022-April-Home-Sales-Drop" } ], "author": [ { "@type": "Person", "name": "Sarah Hansen", "url": "https://money.com/author/sarah-hansen/", "@id": "https://money.com/author/sarah-hansen/#author", "description": "Sarah Hansen is a senior writer at Money covering all things personal finance. 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