U.S. existing home sales continued to slide in April as limited inventory and high prices cooled consumer demand.
Sales of previously owned homes tumbled 3.4% in April from the prior month to an annual rate of 4.28 million units, according to new data released Thursday by the National Association of Realtors (NAR). On an annual basis, existing home sales are down 23.2% when compared with April 2022.
“Home sales are bouncing back and forth but remain above recent cyclical lows,” said Lawrence Yun, NAR chief economist. “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.”
There were about 1.04 million homes for sale at the end of April, according to the report, an increase of 7.2% from March and up just 1% from one year ago.
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Limited inventory has also bolstered demand: Homes sold on average in just 22 days, down from 29 days in March and up from 17 days one year ago.
Before the COVID-19 pandemic, homes typically sat on the market for about a month before being sold.
At the current pace of sales, it would take roughly 2.9 months to exhaust the inventory of existing homes. Experts view a pace of six to seven months as a healthy level.
“The severe lack of new inventory coming onto the market is restricting home sales more so than the pullback in demand,” said Nicole Bachaud, Zillow senior economist. “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.”
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The median price of an existing home sold in April was about $388,800, a 1.7% decline from the previous April. However, that decline is not reflective of a broad national trend. Prices varied across the country, with housing costs climbing in the Northeast and Midwest, but retreating in the South and the West.
“Roughly half of the country is experiencing price gains,” Yun said. “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. Distressed and forced property sales are virtually nonexistent.”
The interest rate-sensitive housing market has cooled rapidly in the wake of the Federal Reserve’s aggressive tightening campaign.
For months, higher mortgage rates have dampened consumer demand and brought down home prices. As rates have slowly fallen from a peak of 7%, the housing market has shown early signs of stirring back to life.
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