U.S. new home sales miss forecasts amid rising mortgage rates

REAL ECONOMY BLOG | May 23, 2024

New home sales fell below estimates in April as mortgage rates surged to above 7%. The data, released by the Census Bureau on Thursday, pointed to a disappointing month for housing sales, following the drop in April’s existing home sales released on Wednesday.

The rebound in inflation in the first quarter was the key factor. Mortgage rates, especially the 30-year rate, moved in tandem with other long-term yields when inflation had suggested a more hawkish stance from the Federal Reserve.

But mortgage rates have dipped since the start of May when the Fed appeared to be less hawkish.

Whether that will remain the case in the second half of May is less clear after the release on Wednesday of the Federal Open Market Committee’s minutes, which showed a Fed that was less certain about how restrictive rates were.

So far, the 30-year yield has remained below April’s high, implying a more encouraging month for home sales.

In a separate report on Thursday, new jobless claims dropped by 8,000 to 215,000 last week, continuing to point to a healthy labor market where layoffs are still under control.

Still, looking at the longer-term trend, new claims have been on a small uptrend since January, suggesting a gradual cooling of the labor market.

This article was written by Tuan Nguyen and originally appeared on 2024-05-23.
2022 RSM US LLP. All rights reserved.
https://realeconomy.rsmus.com/u-s-new-home-sales-miss-forecasts-amid-rising-mortgage-rates/

RSM US Alliance provides its members with access to resources of RSM US LLP. RSM US Alliance member firms are separate and independent businesses and legal entities that are responsible for their own acts and omissions, and each are separate and independent from RSM US LLP. RSM US LLP is the U.S. member firm of RSM International, a global network of independent audit, tax, and consulting firms. Members of RSM US Alliance have access to RSM International resources through RSM US LLP but are not member firms of RSM International. Visit rsmus.com/aboutus for more information regarding RSM US LLP and RSM International. The RSM(tm) brandmark is used under license by RSM US LLP. RSM US Alliance products and services are proprietary to RSM US LLP.

Isler CPA is a proud member of RSM US Alliance, a premier affiliation of independent accounting and consulting firms in the United States. RSM US Alliance provides our firm with access to resources of RSM US LLP, the leading provider of audit, tax and consulting services focused on the middle market. RSM US LLP is a licensed CPA firm and the U.S. member of RSM International, a global network of independent audit, tax and consulting firms with more than 43,000 people in over 120 countries. Our membership in RSM US Alliance has elevated our capabilities in the marketplace, helping to differentiate our firm from the competition while allowing us to maintain our independence and entrepreneurial culture. We have access to a valuable peer network of like-sized firms as well as a broad range of tools, expertise, and technical resources. For more information on how the Isler CPA can assist you, please call us at 855-206-5697.