Sales of previously owned homes in the United States unexpectedly fell in April, marking the second consecutive monthly decline, as higher mortgage rates and escalating home prices continued to weigh on demand. According to the National Association of Realtors (NAR), sales slipped by 1.9% from March to a seasonally adjusted annual rate of 4.14 million units, falling short of the anticipated increase to 4.21 million units. Compared to April 2022, sales were also down by 1.9%.
The housing market has been grappling with a combination of high mortgage rates and rising home prices, which have deterred potential buyers. "Elevated mortgage rates and rising prices are forcing potential home buyers to wait for buying conditions to improve," noted Ben Ayers, senior economist at Nationwide.
The average rate on a 30-year fixed-rate mortgage has struggled to break below 7%, contributing to the decline in home sales. Data from Freddie Mac showed that mortgage rates surged to more than a five-month high of 7.22% in early May. This rate hike has added pressure on buyers and has been a significant factor in the market slowdown.
In April, the total housing inventory increased by 9% to 1.21 million units, reaching the highest level since October 2021. This figure represents a 16.3% rise from a year ago, although it remains below the 1.8 million units reported in April 2019, prior to the COVID-19 pandemic. Despite the increase in inventory, the market still faces tight supply, particularly for entry-level homes.
Properties typically remained on the market for 26 days in April, up from 22 days a year ago. About two-thirds of houses went under contract within a month of listing, indicating that demand persists even amid higher prices and mortgage rates. "It is a very frustrating market out there," said Lawrence Yun, the NAR's chief economist. "Mortgage rates are high. Lack of inventory, to some degree, looks like it's hindering sales."
The rise in inventory was most pronounced in homes priced at $1 million or more, where supply rose by 34% from a year ago. Sales in this price bracket soared by 39.7%. In contrast, homes priced below $100,000 saw a 7.1% decline in sales. This disparity underscores the challenges faced by first-time and lower-income buyers in the current market.
The median price of an existing home sold in April reached $407,600, a 5.7% increase from a year earlier and the highest price recorded for any April. Home prices rose in all four major U.S. regions, reflecting ongoing price pressures despite the increase in inventory. At least 27% of homes sold last month were above the listing price, indicating the prevalence of multiple offers in certain areas.
First-time buyers accounted for 33% of April sales, up from 29% the previous year. This marks the highest share since January 2021 but remains below the 40% that economists and realtors consider necessary for a robust housing market. All-cash sales constituted 28% of transactions, unchanged from a year ago, while distressed sales, mostly foreclosures, represented only 2% of transactions.
Regionally, sales in the Northeast fell by 4% from March and 4% from April 2022. The median price in the Northeast was $458,500, up 8.5% year over year. In the Midwest, sales dropped 1% month to month and year over year, with a median price of $303,600, up 6% from April 2022. The South saw a 1.6% month-to-month decline and a 3.1% year-over-year drop in sales, with a median price of $366,200, up 3.7% from last year. In the West, sales decreased by 2.6% for the month but rose 1.3% from a year ago, with a median price of $629,600, up 9.3%.
