Sales of new single-family homes are up 4.1 percent to 683,000 in April after a downward revision to 656,000 in March. The level of sales is above the consensus of 670,000 in the Econoday survey of forecasters. Sales are up 11.8 percent year-over-year from 611,000 in April 2022. Sales of new homes continue to benefit from the limited supplies of existing homes for sale even though home mortgage rates remain elevated, although below the peaks seen in the fall of 2022. Buyers of new single-family homes are also taking advantage of more competitive pricing in new construction.

The supply of new single-family homes declined to 7.6 months' work in April after 7.9 in March, and is below 8.5 months in April 2022. Homebuilders responded to rising mortgage rates in early 2022 and anticipation of even higher rates by cutting back on new construction. However, fewer existing units are coming on the market as current homeowners stick with their under-6 percent fixed rates. Homebuilders have benefited from demand as renters continue to seek to lock in monthly housing costs, and first-time buyers are able to negotiate prices and/or take advantage of builders' incentives. The median price of a new single-family home is down 7.7 percent to $420,800 in April from $455,800 in March and 8.2 percent lower than $458,200 a year ago. Some of this is due to builders turning to smaller projects to attract potential homeowners who otherwise would be priced out of the market and/or don't need a larger home.

Many of the sales of new single-family homes are for units not yet started with a 23 percent share of the total 683,000 units. This is up from 18 percent in March. Units under construction in April accounted for 39 percent of the total, down from 43 percent in March. With buyers taking out contracts on projects under way, completed units make up 38 percent of the total in April, down from 40 percent in March.

The solid showing for new home sales helps lift Econoday's Consensus Divergence Index to 32, indicating tangible outperformance for the US economy relative to expectations.

After a sharp jump to a 683,000 annualized rate in March, new home sales in April are expected to ease back to 670,000.

New home sales measure the number of newly constructed homes with a committed sale during the month. The level of new home sales indicates housing market trends and, in turn, economic momentum and consumer purchases of furniture and appliances.

This provides a gauge of not only the demand for housing, but the economic momentum. People have to be feeling pretty comfortable and confident in their own financial position to buy a house. Furthermore, this narrow piece of data has a powerful multiplier effect through the economy, and therefore across the markets and your investments. By tracking economic data such as new home sales, investors can gain specific investment ideas as well as broad guidance for managing a portfolio. Each time the construction of a new home begins, it translates to more construction jobs, and income which will be pumped back into the economy. Once the home is sold, it generates revenues for the home builder and the realtor. It brings a myriad of consumption opportunities for the buyer. Refrigerators, washers, dryers and furniture are just a few items new home buyers might purchase. The economic"ripple effect" can be substantial especially when you think a hundred thousand new households around the country are doing this every month. Since the economic backdrop is the most pervasive influence on financial markets, new home sales have a direct bearing on stocks, bonds and commodities. In a more specific sense, trends in the new home sales data carry valuable clues for the stocks of home builders, mortgage lenders and home furnishings companies.