Home sales fall again but prices continue to rise to record highs

The pace of second-hand home sales fell in April, the third consecutive month of declining sales, even as prices hit a new record high.

Existing home sales fell 2.4% to a seasonally adjusted annual rate of 5.61 million in April, the slowest rate since June 2020, according to data released Thursday by the National Association of Realtors.

Although real estate is generally considered an essential service, sales were held back in June 2020 by the pandemic, travel restrictions and social distancing. In many places, potential buyers were required to wear masks, gloves and even foot coverings.

Sales were 5.9% lower than the previous year’s level.

House prices continued to soar. The existing median price for a home sold in April hit a record $391,200, 14.8% higher than the median price a year ago.

“The market is quite unusual as sales are falling, but listed houses are still selling fast and house prices are much higher than a year ago,” said Lawrence Yun, chief economist at NAR.

Sales of existing homes are counted at the close, meaning those homes would have closed in February and March. Mortgage rates rose sharply in the second half of February and March, making home affordability a tougher hurdle for many potential buyers.

Home sales fall again but prices continue to rise to record highs

“Rising home prices and sharply rising mortgage rates have reduced buyer activity,” Yun said. “It looks like more declines are imminent in the coming months, and we will likely return to pre-pandemic home sales activity after the remarkable uptick of the past two years.”

There are signs that higher prices are bringing more sellers into the market. Total housing inventory at the end of April stood at 1,030,000 units, up 10.8% from March but down 10.4% from a year ago. At the current rate of sales, there is 2.2 months supply of unsold homes on the market, up from 1.9 months in March and up from 2.3 months in April 2021.

“The housing supply has started to improve, albeit at an extremely slow pace,” Yun said.

The share of first-time buyers in April was 28%, compared to 30% the previous month and 31% a year ago. Historically, first-time buyers accounted for around 34% of the existing home market, but many new families were shut out of the market.

Rates continued to climb, putting homes even further out of reach for many who would like to buy a home. The 30-year fixed-rate mortgage rate was around 3.75% at the start of March. It is now around 5.25%.

Single-family home sales fell to a seasonally adjusted annual rate of 4.99 million in April, down 2.5% from March and 4.8% from a year ago. The median price of existing single-family homes was $397,600 in April, up 14.8% from April 2021.
Compared to a year ago, sales of homes priced over $500,000 are up sharply. Sales of cheaper homes have fallen sharply, demonstrating how the high end and the low end of the market are moving in different directions. Sales of homes priced over $1 million are up 16.3% from a year ago and now account for 7.8% of the market, up from 5.6% last August. Sales of homes priced below $250,000 represent 24.9% of the market, down from 29.7% in August.


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