Sales of newly built homes dropped 16.6% in April from March, far more than expected, and were down 26.9% from April 2021, according to the U.S. Census.

The annualized rate came in at 591,000 units, seasonally adjusted. Analysts had been expecting 750,000. March’s read was also revised lower.

That is the slowest sales pace since April 2020, when everything shut down at the start of the Covid pandemic. Sales surged quickly after that, as Americans sought bigger homes with outdoor spaces for quarantining.

These numbers are based on signed contracts during the month, not closings, so it is perhaps the most up-to-date indicator in the housing market. Mortgage rates, which have been rising since January, really shot up in April. The average rate on the 30-year fixed loan began the month at 4.88% and ended it at 5.41%, according to Mortgage News Daily.

Consumers are being hit by rising interest rates and four-decade-high inflation. That is making it even harder for them to afford today’s higher home prices. The median price of a new home sold in April was $450,600, an increase of nearly 20% from the year before.

“While new construction gained favor with many would-be buyers over the past two years due to the extreme shortage of existing homes for sale, the rising cost of a new home is now pricing many people out of the market,” said George Ratiu, senior economist at Realtor.com. “The market for new homes is mirroring broader real estate trends, as rising inflation is taking a bigger chunk out of Americans’ paychecks and surging borrowing costs are compressing homebuyers’ budgets.”

A stark pullback in demand, and not overconstruction, is hitting the market. Housing starts have actually been falling over the past few months. Slower sales caused the inventory of newly built homes to jump sharply to a nine-month supply. A six-month supply is generally considered balanced between buyer and seller.

Builders are also starting to see an uptick in cancellation rates. While those have not shown up in earnings releases yet, analysts who follow the builders are beginning to report it.