New home construction continues at a rapid pace, but new sales data shows the market may be cooling down, slightly.
In April, sales dropped by 17%, the biggest dip in nearly a decade, according to data released last week by the Census Bureau.
However, home prices remain high, up nearly 20% with a median price of $450,000.
While the sales data may suggest a slower market, experts view it as a reality check.
“What’s happening is maybe the market was traveling at about 125 miles an hour, now we’re just going 100 miles an hour,” said Mark Johnson, the president of JPAR Real Estate. “It’s still fast, it’s just slower than before.”
Some potential buyers may be waiting it out due to the mix of overall inflation and higher interest rates.
“A typical mortgage payment is up 57% compared to just a year ago which really translates into $720 more on their monthly payment,” said George Ratiu, a senior economist with Realtor.com.
The high prices may be pushing some away, and hot markets can have ripple effects.
Take Las Vegas for example, where the median price is $515,000. It’s driving up sales in Pahrump, Nevada—more than an hour away from Las Vegas—where buyer Lee Moore said the prices are still affordable.
“In Pahrump, you can get bigger lots, bigger property, for less,” Moore said.
Housing demand still outpaces supply with new construction, which remains hampered by supply chain issues.
“You have to take possession of the home and get resourceful for a few months until your microwave shows up or your refrigerator or some part like that,” Johnson said.
More inventory could be on the way. Realtor.com tracking indicated more owners are planning to list their homes in the summer months.
“For buyers who have patience and can wait, it’s likely that in just a few months we’re going to see a very different housing market,” Ratiu said. “More inventory, more approachable prices.”
Data indicates 73 million millennials are hoping to buy homes in the next two years, so analysts predict there will be no decrease in demand.