Sales of new homes fell more than expected in the United States last month, the government said on Tuesday, the latest sign the housing market may have peaked after booming amid the Covid-19 pandemic.
The Commerce Department reported the annualized sales pace fell to 863,000 units in April, seasonally adjusted, 5.9 percent less than March's rate, which was revised down to 917,000 -- more than 100,000 fewer than originally reported.
Low mortgage rates and the disruptions to daily life caused by the pandemic sent the housing market soaring in 2020, tightening supply and pushing home prices up.
Prices began climbing again last month, the data said, but supply increased, and Ian Shepherdson of Pantheon Macroeconomics said the data underscore that the boom may finally be over.
"The story here probably is a combination of fading Covid-induced demand for homes outside cities and/or bigger homes in the suburbs, coupled with the impact of higher mortgage rates and tighter lending standards," he said in a note.
Sales fell the most in the Northeast, which saw a decrease of 13.7 percent, while the decline in the South and Midwest was around eight percent. The West saw growth of 7.9 percent.
With firms rushing to build supply in the face of customer demand, supply grew to 4.4 months, seasonally adjusted, a gain of 10 percent.
However, the median sale price climbed to $372,400, not seasonally adjusted, nearing the peak reached in January of this year.
Another factor constraining sales was a tightening of mortgage standards, but Shepherdson predicted that would ease as the US economy continues recovering, aided by Covid-19 vaccines.
"This should lift mortgage applications over the next few months, triggering a rebound in sales in the summer or fall, but the near-term outlook is poor," he said.