WASHINGTON, D.C.: New single-family home sales in the U.S. rose sharply in April to their highest level in over three years as builders cut prices to attract buyers navigating elevated mortgage rates and an uncertain economic environment.

However, revised figures for February and March tempered the surprise upside, and analysts warn that the broader housing market remains under pressure.

Data from the Commerce Department this week showed that new home sales climbed 10.9 percent last month to a seasonally adjusted annual rate of 743,000 units—the highest since February 2022. Still, March’s sales pace was revised down to 670,000 units from a previously reported 724,000, while February’s figure was also cut to 653,000.

Despite the strong April reading, Citigroup economist Veronica Clark cautioned that the sector remains fragile. “Strength in new home sales does not change our view that housing activity is weakening further in the second quarter and is likely to remain soft this year,” she said, pointing to persistent high interest rates and a cooling labor market.

Sales were mixed across the country. They fell 14.8 percent in the Northeast, surged 35.5 percent in the Midwest, rose 11.7 percent in the South, and edged up 3.3 percent in the West. Year-on-year, sales rose 3.3 percent.

The uptick in sales comes as homebuilders increasingly turn to price cuts and incentives to counter the effects of nearly 7 percent mortgage rates. The median price of a new home fell 2.0 percent year-on-year in April to US$407,200, with most sales concentrated in the $300,000 to $399,999 range. A recent National Association of Home Builders survey showed the highest share of builders cutting prices in nearly 18 months.

Still, economic headwinds loom large. Mortgage rates have risen alongside U.S. Treasury yields, driven by market unease over the Trump administration’s fiscal and trade policies. President Trump’s latest threat to impose a 50 percent tariff on EU goods and a potential 25 percent levy on iPhones made outside the U.S. rattled financial markets. The dollar slipped, Treasury yields fell, and stocks traded lower following the announcement.

According to Freddie Mac, the average rate on a 30-year fixed mortgage hit 6.86 percent this week, the highest in three months. Analysts say this could weigh on affordability and dampen future demand.

Despite April’s sales strength, the overall inventory of new homes remains high, close to levels last seen in 2007. At the current pace, it would take 8.1 months to clear the backlog—down from 9.1 months in March.

Builders remain cautious. With a surge in the supply of existing homes and weakening demand, the incentive to start new construction is fading. “Housing starts have already declined, suggesting that the availability of new builds will fade from here,” said Nationwide economist Ben Ayers. “Additionally, the buildup in existing homes for sale should shift some demand away from the new home market over 2025.”