(Bloomberg) -- Purchases of new homes in the US declined last month as buyers were deterred by high prices and mortgage rates. 

New single-family home sales decreased 4.7% to a 634,000 annual pace last month, according to government data released Thursday. Purchases in the prior months were revised down. The median estimate of economists surveyed by Bloomberg was 678,000.

New-home sales have largely stabilized over the past year, suggesting that while underlying demand remains strong, buyers are still largely restrained by affordability challenges. 

Mortgage rates have eased somewhat in recent weeks after softer readings on inflation and employment, but Federal Reserve officials have still signaled that interest rates need to stay at a two-decade high for most, if not all of this year.

Homebuilders — some of which who are offering pricing incentives to draw buyers in — have been rushing to construct houses lately and compensate for a shortage of homes in the nation’s resale market, which has been hampered by high borrowing costs discouraging sellers from listing their homes. 

Last month, the supply of available homes increased to 480,000 in April, still the highest inventory since 2008. Despite the increase, the median sales price of a new house rose 3.9% from a year ago to $433,500 in April.

Homebuilders and their shareholders have benefited from the weakness in the existing-market, reporting strong order books and enjoying robust stock performance. A publicly-traded fund of builders and related firms, the iShares US Home Construction ETF, is up 41% from a year ago, compared to a 28% gain in the S&P 500 Index.

“There’s more demand than there is supply, which I think still creates a pretty favorable operating environment for all the builders,” Ryan Marshall, chief executive officer of Atlanta-based PulteGroup Inc., said at a conference last week.

New-home sales declined in three of four regions, including a 7.3% drop in the West and a 4.8% decrease in the South. In the Midwest, purchases rose at the fastest pace in nearly three years.

New-home sales are seen as a more timely measurement than purchases of previously-owned homes, which are calculated when contracts close. However, the data are volatile. The government report showed 90% confidence that the change in new-home sales ranged from a 7.3% decline to a 16.7% gain.

The release included revisions to seasonally adjusted data back to January 2019.

--With assistance from Chris Middleton.

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