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A pile of lumber at a home under construction at the Cold Spring Barbera Homes subdivision in Loudonville, New York, US, on Wednesday Nov. 8, 2023.  Angus Mordant | Bloomberg | Getty Images Sales of newly built homes dropped 4.7% in April compared with March, and dropped a larger 7.7% from the prior year, the U.S. Census said Thursday. March sales were also revised significantly lower. Higher mortgage rates are clearly hampering sales. The monthly reading is based on signed contracts, so it reflects people shopping during the month and inking deals based on current rates. The average rate on the 30-year fixed mortgage was in the high 6%-range at the end of March, but then shot up to 7.5% during April, cutting into affordability. Adding to that, the median price of a new home sold in April was $433,500, 4% higher than it was in April 2023. Some of that is due to the mix of homes selling, which is mostly on the higher end of the market. Those buyers are not as influenced by mortgage rates, as they often use all cash. Builders say they cannot lower prices due to high costs for land, labor and materials. The big production builders have been buying down mortgage rates to help boost sales, but they are able to do that because of their size. DR Horton and Toll Brothers reported strong earnings in their latest quarters, beating expectations and citing growing demand due to low supply in the resale market. “For all the happy talk from the big builders (who are taking market share), the entire new build industry is selling new homes at a pace below the 5 yr average,” noted Peter Boockvar, chief investment officer at Bleakley Financial Group and a CNBC contributor. In the first quarter of…

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Filed under: News - @ May 23, 2024 3:28 pm