Sales of previously owned homes in the US fell by 1.9% in April compared to March, according to the National Association of Realtors (NAR). This decline was unexpected, as forecasts had predicted a slight gain in sales. Furthermore, sales were also down by 1.9% compared to April of the previous year. The decrease in sales can be attributed to the increase in mortgage rates that began in February and continued to rise throughout April.
Lawrence Yun, the chief economist for the Realtors, commented on the impact of these higher mortgage rates on home sales. He stated that the 300 basis point increase from pre-pandemic levels has put home sales in uncharted territory. The higher rates have led to a significant decrease in buyer demand, resulting in a decline in home sales.
In addition to the rise in mortgage rates, another factor contributing to the decrease in sales is the tight supply of homes. At the end of April, the total housing inventory was 1.21 million units, which is a 9% increase from the previous month and a 16% increase from the previous year. However, this level of supply is still considered low, with only a 3.5-month supply at the current sales pace. A balanced market typically has a six-month supply of homes.
Interestingly, while overall sales were down, there were significant variations in sales based on price range. Sales of homes priced below $100,000 saw a substantial decline of 7.1% compared to the previous year. On the other hand, sales of homes priced above $1 million saw a significant increase of 40%. This surge in high-end home sales may be attributed to the fact that inventory in this price range has increased by 34% compared to the previous year.
The tight supply of homes has also led to an increase in home prices. The median price of an existing home sold in April was $407,600, which is a 5.7% increase compared to the previous year. This record-high price is due to strong demand and multiple offers on properties. In fact, 27% of homes sold above the list price in April.
Despite these high prices, first-time buyers made a slight comeback, accounting for 33% of April sales, up from 29% the previous year. However, the all-cash share of transactions remained relatively high at 28%.
Regionally, sales varied across different parts of the country. In the Northeast, sales fell by 4% compared to March and April of the previous year. The median price in the Northeast was $458,500, representing an 8.5% increase from the previous year. In the Midwest, sales dropped by 1% month-to-month and year-over-year, with a median price of $303,600, up 6% from the previous April. In the South, sales decreased by 1.6% from March and 3.1% from the previous year, with a median price of $366,200, up 3.7% from the previous year. Finally, in the West, sales declined by 2.6% compared to the previous month but increased by 1.3% compared to the previous year. The median price in the West was $629,600, representing a significant increase of 9.3% from April of the previous year.
In conclusion, the decline in sales of previously owned homes in April can be attributed to the increase in mortgage rates and the tight supply of homes. These factors have led to a decrease in buyer demand and an increase in home prices. However, there were variations in sales based on price range, with high-end homes experiencing a surge in sales. The regional differences in sales and prices also highlight the varying dynamics of the housing market across different parts of the country.
