After posting a surprise 14.5% monthly increase in February, existing home sales were back down again in March, a trend that continued into April, with existing home sales posting a 3.4% monthly decline to a seasonally adjusted annual rate of 4.28 million. On a year-over-year basis, sales were down 23.3%.
“Home sales are bouncing back and forth but remain above recent cyclical lows,” Lawrence Yun, NAR’s chief economist, said in a statement. “The combination of job gains, limited inventory and fluctuating mortgage rates over the last several months have created an environment of push-pull housing demand.”
Industry economists believe that the drop in existing home sales is two pronged: Higher mortgage rates are making purchasing a home less affordable for many buyers; and for the buyers who are able to afford a home, there are very few homes to choose from as inventory is so constrained.
“While it’s true that there are fewer buyers who can afford to compete in today’s housing market, a key piece of the story is that there are fewer homes for those buyers to shop for,” Nicole Bachaud, the senior economist at Zillow, said in a statement. “The severe lack of new inventory coming onto the market is restricting home sales more so than the pull back in demand. And as mortgage rates are staying relatively high and experiencing a degree of volatility, existing homeowners are feeling locked into their low rates and monthly payments. This tension will continue to limit inventory and thus suppress sales.”
At the end of April, the inventory of unsold existing homes stood a 1.04 million, up 7.2% from the month prior and representing 2.9 months’ of supply at the current sales pace.
With mortgage rates continuing to remain in the mid-to-high 6% range, the median sales price of an existing home fell slightly compared to a year ago, dropping 1.7% to $388,800. This is the third month in a row of year-over-year sale price declines. Median sales prices rose slightly in the Northeast and Midwest but fell in the South and West.
“Roughly half of the country is experiencing price gains,” Yun noted. “Even in markets with lower prices, primarily the expensive West region, multiple-offer situations have returned in the spring buying season following the calmer winter market.”
Despite the volatility and uncertainty in the economy, distressed sales represented just 1% of all sales in April, the same as in March and a year prior.
Regionally, existing home sales fell in all of the four regions month over month, with the West recording the largest monthly drop at 6.1% to a sales pace of 770,000 homes.
On a yearly basis, all four regions also recorded decreases in the existing home sales pace, with the Midwest (annual rate of 1.02 million) falling 21.5 %, the South (annual rate of 1.98 million) dropping 20.2%, the Northeast (annual rate of 510,000) falling 23.9% and the West dropping 31.3%
The West also recorded the largest year over year price change, falling 8.0% from a year prior to a median sale price of $578,200.