Sales of previously owned homes in the United States fell sharply in April, as prospective buyers grappled with a prohibitively expensive housing market.
The National Association of Realtors (NAR) reported on Wednesday that home sales fell by 1.9 percent in April, reaching an annualized rate of 4.14 million units. This figure, which represents the number of homes that would be sold over a year if the monthly sales pace remained consistent, fell short of Wall Street’s expectations. Analysts had predicted a slightly higher rate of 4.21 million units.
Year-over-year, home sales have also dropped by 1.9 percent compared to April 2023.
Despite the slowdown in sales, the housing market witnessed a significant rise in prices. The median price for an existing home in April surged by 5.7 percent to $407,600, marking the highest price ever recorded for the month of April.
This increase represents the largest jump in home prices since October 2022. Nevertheless, prices remain below the peak reached in June 2022, when the median price of a resale home was $413,800.
Rising prices hurt home affordability, especially when mortgage rates are high.
“Home prices reaching a record high for the month of April is very good news for homeowners,” NAR Chief Economist Lawrence Yun said “However, the pace of price increases should taper off since more housing inventory is becoming available.”
Rising home prices are a mixed blessing more homeowners. While owners like to see the value of their own property appreciate, rising prices mean those owners would have to pay more for their next home.
The average rate on a fixed 30-year mortgage was 6.99 in April. Mortgage rates have been rising this year as expectations for interest rate cuts from the Federal Reserve have been pushed out by resurgent inflation.
Approximately 27 percent of properties sold in April fetched prices above the listing price, indicating strong competition among buyers. The NAR also highlighted a remarkable surge in sales of homes priced at $1 million or more, which saw a 40 percent increase compared to the previous year, outpacing all other price categories.
There was a silver lining for prospective buyers.
The number of homes on the market rose nine percent from a month earlier to 1.21 million. That represents a 16.3 percent increase from a year ago. Unsold inventory sits at a 3.5-month supply at the current sales pace, up from 3.2 months in March and and three percent a year ago. For homes priced $1 million or more, inventory and sales increased by 34% and 40%, respectively, from a year ago.
“Home sales changed little overall, but the upper-end market is experiencing a sizable gain due to more supply coming onto the market,” said Yun.
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