New single-family home sales plunged by 16.6% from March and were down 26.9% year on year. New home sales dropped to the lowest level since the lockdown in April 2020.

New home sales are often viewed as a leading indicator of the state of the overall housing market.

The unsold inventory of new homes spiked by 34,000, a historic month-to-month leap. There were 440,000 unsold new homes (seasonally adjusted), the highest level since May 2008 in the midst of the housing bust. Both, the month-to-month and year-over-year increases in unsold new homes were the largest leaps ever recorded, both in numbers of unsold houses and in percentage terms.

The biggest drop in new home sales occurred in the under-$400k price range, indicating that high prices and rising mortgage rates are squeezing middle-class Americans out of the housing market.

WolfStreet broke down the current dynamics in housing.

Homebuyers struggle with spiking mortgage rates which make the high home prices that much more difficult to deal with. And with each increase in mortgage rates, and with each increase in home prices, entire layers of potential buyers abandon the market, and sales volume plunges."