Sales of new single-family homes fell 4.7 percent in April to 634,000 units after 665,000 units in March, and were down 7.7 percent from 687,000 units in April 2023. The report includes annual revisions. The level in April is below the consensus of 675,000 in the Econoday survey of forecasters.

The slowing of sales in April likely reflects the impact of rising mortgage rates. The rate for a 30-year fixed rate mortgage averaged 6.82 percent in March but rose to 7.04 percent in April. Potential homebuyers remain interest rate sensitive and crossing the 7 percent threshold seems to be a barrier to home affordability for many.

The median price of a new single-family home fell 1.4 percent in April to $433,500, a softening that likely reflects more homes sold in lower price ranges where purchases are more affordable. The underlying trend for prices is still rising with the price of a new single-family home up 3.9 percent year-over-year.

Slower sales leave more supply on the market. The months' supply available for sale is 9.1 in April, up from 8.5 in March and 7.5 in April 2023. With higher mortgage rates and more supply of existing units coming on to the market, inventories of new homes are seeing more competition for fewer buyers.

Sales of new single-family homes are seeing buyers waiting longer to commit to new construction. The share of sales for units not yet started is 13 percent in April, the same as in the prior two months. The share of homes sold that are under construction dipped to 39 percent in April from 40 percent in March, while sales of completed units were up slightly to 48 percent in April from 47 percent in March.

Despite elevated mortgage rates and high home prices, sales continued at a solid pace of 693,000 in March. April's consensus, however, is a fall to 675,000.

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.