Why did we just see the highest new home sales print in years?

I know this is a crazy stat, given how much the builders’ confidence is falling, but new home sales just had the highest monthly sales print in years. Can this be revised lower in the future? Yes, just like the previous months have been. But there’s a bigger story here that I’ll address because this headline might be very confusing.

First, let’s review the new home sales report itself.

New home sales report

From Census: Sales of new single-family houses in April 2025 were at a seasonally-adjusted annual rate of 743,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 10.9 percent (±13.5 percent)* above the March 2025 rate of 670,000, and is 3.3 percent (±14.7 percent)* above the April 2024 rate of 719,000. 

Here is a look at the regional breakdown of the data. You can see where the growth came from and these numbers will be revised lower, like in previous months. With new home sales and Census data in general, you need to follow the revision trend if it’s positive or negative.

Here are some general charts from the entire report. The monthly supply data has decreased in this report. However, as shown below, the total inventory data for builders is currently higher than it has been in recent history, even though it fell slightly in this report. Also, when you look at the new home sales data itself, we really have been range-bound for the past few years. Despite that, today’s report has been the highest since 2022.

Given this report, why are builder stocks performing poorly and why is the homebuilder survey showing such negative results, which is only four points away from the lows during the COVID-19 pandemic? Remember that this survey focuses more on smaller builders. Inventory levels are rising and unlike larger publicly traded companies, smaller builders often lack strong balance sheets. Therefore, it’s not surprising that confidence data has declined, especially considering the elevated mortgage rates and discussions about tariffs.

Builder purchase application data still positive

Many people may not realize that the new home sales sector has its own purchase application data, which is released monthly by the Mortgage Bankers Association (MBA). Just last week, the report showed a 5.3% growth year over year and a 2% growth month to month.

Based on the application data, the MBA projected new home sales to be 724,000 so the 743,000 figure, which I believe will be revised, isn’t too surprising. New home sales have remained relatively stagnant for years, staying within a small range. If we start to see a breakout in the coming months, we could potentially exceed 800,000 in sales. However, I haven’t seen that happen with rates above 7%; it tends to get costly for builders to pay down rates.

Conclusion

The headline may seem a bit perplexing. Last week, I appeared on CNBC, where I discussed builders and shared insights from fellow analysts. There are promising signs of housing demand; however, this demand is closely tied to the need for lower mortgage rates. My explanation and this article about the most recent housing starts report can provide a more precise context for the headline.