While new home sales can be volatile on a month-over-month basis, April's decline is the sharpest monthly contraction since July 2013 which coincided with a spike in mortgage rates. Deteriorating buying conditions appear to be hitting sales at the entry level the hardest. Homes priced below $399,000 accounted for 36% of sales in April, down from 44% in March and 58% of sales last April. Many of the unsold homes are still under construction, however. The number of unsold homes that are still under construction rose to 288,000, which marks the highest level since 2007. Rising financing costs and rapid price appreciation have caused many traditional buyers to take a step back from the housing market. In addition, some previously qualified buyers may no longer qualify under current interest rates. - Wells Fargo Economics

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