Sales of new U.S. homes sagged well below expectations in April to post their biggest monthly drop in more than ten years as rising mortgage interest rates cooled the busy housing market, a government report showed on Wednesday.
Sales of new homes tumbled 11.8 percent to a seasonally adjusted annual rate of 1.093 million units from an upwardly revised record high of 1.239 million in March, the Commerce Department said.
Analysts polled by Reuters were expecting sales to ease to a 1.200 million unit pace.
April's rate was the lowest level of new home sales since November in what is normally the peak season for real estate sales. The decline — the largest monthly drop since January 1994 — could signal the end of a housing boom fueled by the lowest mortgage interest rates since the early 1960s.
Mortgage applications fell last week for the third straight week, the Mortgage Bankers Association reported earlier. At the same time, home resales rose to their second highest level on record last month as undecided home seekers acted before rates rise even higher, data released on Tuesday by the National Association of Realtors showed.
Mortgage interest rates have climbed in recent weeks as evidence of economic growth and an improving job market has led observers to anticipate the Federal Reserve will soon push up short-term interest rates from their lowest level since 1958.
New home sales fell by 22 percent in the South, the region with the greatest volume. Sales fell by 9.4 percent in the West and by 2.5 percent in the Northeast, but rose 10.8 percent in the Midwest.
The number of new homes available for sale at the end of the month was at its highest level since January 1980.