Rising inflation, interest rates and economic uncertainty are driving new home sales in the US to the lowest level since April 2020, reflecting declining builder sentiment as construction bottlenecks continue to slow new home building and raise housing costs.

Sales of newly built, single-family homes in June 2022 fell 8.1% to a 590,000 seasonally adjusted annual rate from a sharply downwardly revised reading in May, according to newly released data by the US Department of Housing and Urban Development and the US Census Bureau. New home sales are down 13.4% in 2022 on a year-to-date basis.

“Builders saw sales decline significantly as buyers were priced out of the market on higher interest rates and ongoing home building and development costs, including building materials,” said Jerry Konter, chairman of the National Association of Home Builders. “This is just the second time that new home sales have fallen below a 600,000 annual pace since Oct. 2018, and this latest report also mirrors a sharp decline in builder confidence as noted in our latest survey.”

Only 14% of new home sales in June were priced below $300,000. A year ago, it was 27%. Meanwhile, inventory levels are elevated and will contribute to near-term production declines as the market finds a new balance, according to the report.