The numbers: Sales of previously-owned homes in the U.S. fell 3.4% in April for the second month in a row, as buyers continue to deal with low levels of home listings and see-sawing mortgage rates.
Sales of existing homes in the U.S. fell to an annual rate of 4.28 million in April, the National Association of Realtors said Thursday.
That’s the number of homes that would be sold over an entire year if sales took place at the same rate in every month as it did in April. The numbers are seasonally adjusted.
“The median price for an existing home fell by 1.7% from last April to $388,800 this year. The drop is the largest since January 2012, when home prices fell 2%. ”
The drop in sales wasn’t as bad as what economists on Wall Street had expected. They forecast existing-home sales to total 4.26 million in April.
But compared with April 2022, home sales were down 23.2%.
Key details: The median price for an existing home fell by 1.7% from last April to $388,800 this year. The drop is the largest since January 2012, when home prices fell 2%.
Home prices peaked in May 2021, where they grew 25.2% annually.
The number of homes on the market rose by 7.2% in April to 1.04 million units. But the number of fresh listings is still down from a year ago, the NAR said.
Homes listed for sale remained on the market for 22 days on average, down from 29 days in March.
Sales of existing homes fell in all regions, with the sharpest drop in the West.
All-cash buyers made up 28% of sales. The share of individual investors or second-home buyers was 17%. About 29% of homes were sold to first-time home buyers.
Big picture: Despite home sales dipping in April, most of the housing data is indicating that the U.S. housing market is in broad recovery.
But a combination of issues are making it a slow one, from a lack of new home listings to see-sawing mortgage rates.
Many homeowners are reluctant to sell for two reasons: They may be reluctant to give up an ultra-low mortgage rate secured during the pandemic for a much higher one, and they also don’t want to deal with competition
Homebuilders are responding to the inventory crunch by bumping up construction of new homes. Housing starts, which refer to when a builder starts constructing a home, rose in April. Rates, on the other hand, are volatile: The 30-year mortgage rose to the highest level in two months to 6.57% as of May 12, the Mortgage Bankers Association said on Wednesday. It was 6.48% the previous week.
Given the underlying issues on supply and rates, sentiment among U.S. consumers regarding the housing market has worsened: The number of people who think it’s a bad time to buy a home has hit a 45-year high.
What the realtors said: “The housing market – at least home sales – is still struggling to recover,” Lawrence Yun, chief economist at the National Association of Realtors, said.
Aside from higher rates, “there’s just simply not enough inventory,” he noted.
Yun also said that the NAR was sharing the idea of addressing the capital gains tax with members of Congress as a way to encourage more homeowners to sell their homes to ease the inventory shortage.
What are they saying? “The very strong underwriting standards during the last housing expansion along with solid labor market conditions will reduce the risk of defaults and forced selling going forward,” Thomas Simons, U.S. economist at Jefferies, wrote in a note.
“The housing sector is already in a recession, but we don’t expect consumption to contract significantly until a cycle of mass layoffs begins, likely during Q3,” he added.
Market reaction: Stocks were up in early trading on Thursday. The yield on the 10-year note
rose above 3.6%.